Spanish Equity Release Fiasco

Page 27 of the brochure Guide to Wealth and Tax Planning in Spain gives us some clues of extreme deceit. Not only it openly vindicates the evasion of Spanish taxes by elaborating on specific tax concepts, but this essay also contains suspicious omissions that, if known, would have made a potential subscriber of the product pull out.  The most crucial omission is contained a Spanish tax provision quoted on page 27, top right, which reads: 

“ non-residents tax payers are only liable on the basis of assets located in Spain (or rights acquired by virtue of inheritance or donation), or where the life insurance policy has been established through a Spanish insurance company.”

This quote is inspired on article 7 of the Spanish Inheritance and Gift Tax Act, which says the above but also, the following: “or where the life insurance has been established by foreign insurance entities operating in Spain”.

Which clearly leads us to conclude that Nordea consciously omitted a crucial bit of information that, if inserted, would have made the whole proposal of Equity Release fall by the wayside and thus, the brochure would have not existed. If all of those who signed with Nordea had been given the benefit of objective and transparent tax information, rather than deliberately manipulated, they would have not been saddled with these obnoxious products. Unfortunately, they were lied to.

Article 282 of the Spanish Penal Code stipulates: “manufacturers or traders that, when advertising products and services, make false or untrue statements about the same, capable of causing serious damage to customers, will serve a minimum of 6 and a maximum of 12 months imprisonment.”

 Documents

• Nordea-Brochure (PDF ~800 kb)

Antonio Flores Uncategorized Equity Release, Equity Release Victims Association, Inheritance tax Spain, Nordea, Nordea Bank

It was a few days ago when I was asked by a victim of Nordea’s equity release scheme in Spain, in a mood of disbelief, whether it was possible for a bank of that stature to have got it so wrong as, after all, they had plenty of money to pay for the best advice from top lawyers.

I could bring an argument against his comment relating to having plenty of money, some of it belonging to their clients-turned-victims, and the advice that this money could buy but, on their own, those fresh memories of very large banks going bust for hanky-panky practices allowed to happen by their advisors, would answer the question.

And then, by coincidence, I read on the Danish press (Copenhagen Post Online) that a few days ago the Danish Financial Services Authoriy had reported Nordea to the police for failing to make a full disclosure in relation to a jewelley firm.

http://www.cphpost.dk/business/business/51997-fsa-reports-nordea-to-police.html

Well, soon enough they will be reported to the Spanish authorities via the criminal courts for miselling financial products on the back of a bening pensioner-friendly equity release programme that was supposed to be the panacea to dodge, “legally”, inheritance and wealth taxes in Spain, all-in-one.

This financial herb-allheal to cure British homeowners from inescapable taxes has morphed into a thorn apple plant of undefined toxicity that is now like an albatross around their necks.

Antonio Flores Uncategorized Equity Release, Equity Release Victims Association, Inheritance tax Spain, Nordea Bank, Wealth Tax Spain

Following a couple of articles in the Daily Telegraph and the Olive Press about Euan Armstrong and his plight, it was decided by a number of people affected by this scandal that an association would be created, to be named the “Equity Release Victims Association”.

The purpose of the Association is to draw the attention of the authorities, namely the Bank of Spain, Financial -CNMV- and Insurance regulators –DGS- and finally the Ombudsman, to the predicament suffered by hundreds of until-then-free-from-mortgage-property-owners who had the misfortune of crossing paths with mostly Scandinavian banks and given the size of the swindle it is strongly believed that this could be classed as an issue of public order.

The association wishes to campaign against banks that marketed, offered and sold unregulated Equity Release products in Spain, through a network of agents, to mostly pensioners. The products were sold on false promises and undertakings, these being:

1. Promises of regulatory compliance of their products in Spain.
2. Promises of IHT exemptions.
3. Promises of Wealth Tax exemptions.
4. Financially self-sustained product, so that the loan would be invested in such a way that the yields would cover the interest cost and leave a surplus, which would be like a salary. Needless to say, this never happened.
5. Protection for property ownership.

On future posts we will provide further information on this soon-to-be-created association.

Antonio Flores Uncategorized Danske Bank, Equity Release Victims Association, Euan Armstrong