Antonio Flores’ Blog

The Spanish Supreme Court has ruled that floor clauses can be deemed void where the bank failed to advise customers with clarity and transparency, establishing conversely that would be licit where borrowers were fully and adequately informed.

The high court analysed the clauses used by the bank BBVA and found them to be in breach of consumer regulations due to the following reasons:

• There is insufficient clear information that such clauses are material to the object of the contract.
• They were inserted together with “ceiling clauses”, which caps the loan interest rate, as if offered in exchange for the bank’s concession.
• The bank failed to offer examples on specific instances of interest rate behaviour.
• There is a lack of clear and comprehensible information in respect of cost comparisons with other loans offered by the lender -where there are others- or a warning that the borrower is not being offered others.
• In the case of BBVA, the clause is embedded within significant data that  disguises it and has the effect of diluting the attention of the consumer.

The Supreme Court has also found these clauses to have a perverse effect: they created the false appearance that the lower the Euribor, the lower the mortgage repayment (it was thus just an amiable facade).

Customers in the above scenario are now in a position to succesfully challenge such clauses although, as was made clear by the Supreme Court, the ruling does not have a retrospective effect.

Do you have one of such clauses in your mortgage loan contract? Have you calculated how much you could save by having it removed?

Antonio Flores Litigation, Mortgages, Property Abusive Clauses, BBVA, Caixa Nova Galicia, Cajas Rurales Reunidas, Floor Clauses, La Caixa, Santander, Spanish mortgage borrowers, spanish mortgages

In this video blog I talk about bank guarantees and the responsibility of financial entities that consented property developers use their bank accounts to collect deposits, without ensuring that those deposits were guaranteed. In this instance, the bank applied the 57/1968 Act which stipulates that “banks will ensure under their responsibility, prior to opening a special account for a property developer, that a guarantee has been taken out.”

Some interesting case law can be read here.

Antonio Flores Litigation Act 57/1968, Aifos, Banco popular, El Pinet, Enforcement guarantees, Execution bank guarantees, La Caixa, La Fortuna, Offplan property, Spain bank guarantees

It is only a few days ago when we read a story of an ailing 80-year-old diagnosed with Alzheimer and dementia, who had been sold €18,000 worth of… worthless financial products from CAM bank. The gentleman in particular had an officially recognized 80% disability, impaired vision and a history of strokes, and yet, he was persuaded by his branch manager into buying CAM shares for €9,000 and a further €9,000 on deposit, until year…3000!

This example of disgraceful behaviour, far from being an isolated case, adds on to a long list of what we could call “bankers´ most despicable actions” (we would completely miss the point if we thought that these are not man-made) and illustrates the utter disrespect and greed of certain individuals working for some banks.

So listed below are Top 7 Banks’ questionable at best, despicable at worst practices I have come across both in the exercise of the legal profession, and exemplifies the declining ethical standards within the industry.

1. Equity Release: a scam that was operated by a number of Scandinavian and British banks where pensioners were asked to gamble away their lifetime savings on two main pretexts: that by registering a mortgage on their property, they could eliminate Inheritance Taxes for their children, legally, and that by investing the loan obtained from the mortgage they would obtain an additional income to their limited pension. A few criminal ongoing court actions, and an avalanche of soon to come civil suits will determine how ethical it was for Rothschild Bank offer a 90-year old a 90% loan on her property…
2. Clip or Swap clauses on mortgages: financial products wrongly sold to mortgage-loan customers as insurance against increasing interest rates. The bona-fide insurance policy was in reality a complex derivative instrument. Most Spanish banks indulged in this awful practice and court cases are being resolved in favour of customers. Bankinter, Popular Bank and a few other culprits have lost 523 Court cases versus 90 ruled in their favour…
3. Bad-advice provided by Deutsche Bank to its customers when advising them that Lehman Brothers and some Icelandic banks, which ultimately went bust, were, nevertheless, the investment of choice. Court number 57 in Madrid is currently dealing with the matter.
4. Awful advice by Santander Bank when offering customers to invest with “world’s biggest conman” Bernie Madoff, despite knowing since 2006 the dangers of investing with him, according to the press.
5. Deceitful advice given to long-standing clients by La Caixa, CAM, BBVA and many other banks to sign up “preferential shares”, when they thought they were depositing their savings on a fixed-deposit. Whereas one would think that younger, dynamic and financial-savvy investors would take on these products, this meeting held by very upset customers seems to suggest otherwise.
6. Abusive use of the extra-judicial foreclosures by some banks. This repossession mechanism is generally (and inadvertently) agreed to by the borrower when signing the mortgage loan deed, is conducted by Notary Publics and can lead the bank keeping a property for €1. An association is fighting to expose this practice.
7. And lastly, a shocking photographic report of Jyske Bank’s not-so-exquisite treatment of an evicted property owner, his belongings and the property itself, following a bizarre dispute lasting 18 years. The Gibraltar-based bank managed to regain possession of an offshore-company-owned property although not ownership, that was retained by the ultimate owner (our client), as confirmed by a  number of quirky court rulings that nevertheless allowed Jyske to put their hands on this property with one sole purpose: destroy as much as they could!

Antonio Flores Mortgages, Scams Banco de Santander, bank repossessions, BBVA, CAM, Deutsche Bank, equity release, Jyske Bank, La Caixa, Rothschild, Swap Clause