The banks have received a significant amount of bad press. This unwelcome attention is not confined to Spain. It perhaps comes as no surprise that banks are being held to account for some of the unprofessional ways they have tried to part customers from their money in the past. Individuals are increasingly realising that the methods used to convince them to buy bank products were not always legitimate. For example, there are cases where banks designed, marketed and sold a number of products to make themselves ‘easy’ money.
One example are the mortgage ‘clips’ or ‘swaps’ offered to non-professional investors as a simple-to-understand product similar to an insurance policy. They were sold as an insurance to protect the client in case the Euribor went up over a certain rate agreed between the bank and the client. The rate was often fixed at 5%. If it went above this rate the bank would pay the difference or the mortgage would remain at the lower, more stable amount.
People were sold this product in spite of the fact that for the last ten years, interest rates have always been held between 2 and 5%. Knowing this, banks still asked clients to swap their variable rate for a fixed rate of 5.5% which they knew the Euribor would never reach. The result being that the bank was bound to profit from this arrangement.
Clients were not informed about the amount of money they would need to pay out if they wished to cancel the policy before it was due to expire. Clients, expecting to pay 500€ to 1,000€ in settlement, were suddenly faced with a bill of 30,000€ to 40,000€.
People were left with a product that they had no real need for and from which they could not wriggle free. In some cases products intended for speculators had been sold to individuals with little to no financial knowledge. With time these unwitting speculators have realised that they handed over their savings in good faith to buy a product with little stability.
What you can do
There is hope. On 5th March 2012 a judge in Alicante declared the contract between a bank and its customer to be null and void. This led to a flood of new cases being tried in court with customers taking legal action against their banks. And in many of these cases the customers are winning. These judges in Spain have recognised the false impressions which banks were giving at the time and that this did not comply with the requirement for transparency.
If you believe you have been mis-sold a product like the mortgage ‘clip’ you can get in touch with our legal department who will check the situation for you. We can inform you of your rights and recover capital in those cases where the pitch did not reflect the true nature of the product.