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The Spanish Lawyer Online

Spanish Equity Release Fiasco

Exposing Danske Bank, Rothschild, Nykredit, Sydbank and Others


Posts Tagged ‘Nykredit’

CNMV responds to an initial info request

June 6th, 2011

The Spanish regulator, the CNMV, has answered a petition on information that was made about 1 month ago. From it, we can conclude that:

  1. Danske Bank´s Capital “Assurance” product did not get clearance to be offered to investors based in Spain. We are waiting for an answer from the Insurance regulator (DGS).
  2. Nykredit Realkredit is regulated in Spain and obtained clearance to offer a product labelled “Euro-denominated perpetual hybrid core capital notes”. Sydbank, with whom investors signed their contracts, is not.
  3. The IFA: no sign of the gentleman although he seems to have clearance to act on behalf of “Caser” Insurance, on an exclusive basis, to offer a number of insurance products. No trace of having authority to sell Danske Bank products. He certainly is not authorized to sell any financial service or product.
  4. Rothschild: Registered with the CNMV but need to be more specific although, since they were selling the Aspect Policy, this will be for the DGS to advise on.


  • Scanned pdf of the response from spanish regulator to initial enquiry here (400 Kb.)

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Spanish Regulator Questioned Over Organisations Offering Equity Release

May 4th, 2011

The noose is closing on the necks of the infringing lenders. On a recent visit to Madrid we filed a formal application to the CNMV, the Spanish financial regulator, for information in relation to the activities of several banks and one insurance broker turned-IFA without authorization.

The DGS (Dirección General de Seguros, Spanish Insurance regulator) also received our visit and we had a mostly interesting meeting with a senior official,who advised us to file an application for information in respect to:

  1. If Danske Bank and Rothschild were registered to sell insurance.
  2. If the products they called as life insurance, or “assurance”, can be described as such or if, on the contrary, they are just financial products hidden behind the more benign format of insurance products for the retired.

Both regulators were not aware of the inverse-mortgage schemes, but were horrified when I explained in detail the state in which borrowers have been left.


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Equity Release Contracts Full of Cracks (II)

April 27th, 2011

I was hoping that the first installment of this theme was not so boring that you’d choose to miss the second one, but on re-reading it, it seems I may have utterly failed. I will therefore try to be concise now in respect of the second set of infringements all the equity release providers committed when “lending”, if that word can ever be used to describe this deceitful product.

Of the few cases that have reached the upper Courts, the one being discussed is essential for its application as case law could render all equity release contracts signed in Spain null and void, with the automatically-derived consequence that the mortgage loans would have to be cancelled, any costs borne by the almost destitute borrowers returned and a considerable compensation paid (here we need to consider the aversion of Spanish judges to embrace the Anglo-Saxon concept of compensation culture).

So if I wrote about the laws referring to the financial services legislation that were clearly flouted by Caja Rural (mind you, far less serious than those of the equity release providers!), now I will verse about those Spanish mandatory civil and consumer protection law provisions that were breached by the above savings banks (and incidentally disregarded as unworthy or inferior by the equity-release foreign lenders). The infringement of these laws made it clear to the Supreme Court that the only treatment for the controversial financial services contract was to apply the maximum penalty: nullity and voidness.

  • Article 6.3 of the Spanish Civil Code: The acts against mandatory and prohibitive laws are null and void, unless they stipulate something different in case of contravention.
  • Article 7 of the Spanish Civil Code:
    • Rights will be exercised in conformity with the requirements of good faith.
    • The laws do not protect the abuse of rights or the anti-social exercise of these. Any act or omission that, judging by the intention of its author, its object or by the circumstances in which it is carried out, surpass the normal limits of the exercise of a right, with damage for a third party, will be give right to a corresponding compensation and the implementation of measurers, judicial or administrative, that impede the persistence of its abuse.
  • Article 5.5 of the General Contractual Conditions Act: Clauses will have to adjust to the criteria of transparency, clarity, concretion and simplicity.
  • Article 8 of the General Contractual Conditions Act: A general contractual condition that contravenes to the detriment of the adhering party, or that go against mandatory and prohibitive laws are null and void, unless they stipulate something different in case of contravention.
  • Article 10.1.a and c of the Consumer Protection Act (in force until the 16th of November 2007 but applicable for contracts signed prior to this date): Clauses, conditions or stipulations that are applied to the offer or promotion of products and services, and clauses not individually negotiated related to such product or services, will have to comply with the following requisites:
    • Concretion, clarity and simplicity in their writing, with the possibility of direct comprehension, without making reference to documents that are not provided simultaneously or prior to the exchange of contracts and those that will have to be inserted by mandate of the laws.
    • Good faith and fair balance between the rights and obligations of the parties, which is any event excludes the utilization of abusive clauses.
  • Article 10.1.a and c of the Consumer Protection Act (in force until the 16th of November 2007): Any stipulations not individually agreed to that contravene the demands of good faith and that cause, in detriment of the consumer, and important imbalance of the rights and obligations of the parties to a contract will be deemed abusive. Particularly, the clauses referred to in the additional disposition of this act will be deemed as abusive. The abusive nature of a clause will be established considering the nature of the goods and services object of the contract and in relation to the concurring circumstances at the time of exchange of contracts, as in relation to other clauses within the contract.
  • Article 25 of the Consumer Protection Act (in force until the 16th of November 2007): Consumers and end users will have the right to be compensated for the demonstrable damages occasioned by the use of the products and services, unless these are of the exclusive fault of the consumer.
  • Article 26 of the Consumer Protection Act (in force until the 16th of November 2007), which is crucial: The actions or omissions of those who produce, import, supply or facilitate products or services to consumers and end users that harm or damage these, will give rise to the responsibility of the former, unless it is demonstrated that the mandatory regulations that are applicable to the product or service have been applied and observed diligently.

And I ask 2 simple questions:

  • Did Rostchild, Danske Bank, Jyske, Nykredit (especially) and a few others comply with any of the mandatory Spanish regulations required for the protection of the consumer, principally?
  • And what about if we assumed that the bankers’ lawyers had no idea of the applicable financial regulatory framework and so, had they known, one presuming these were banks law-abiding, they would have fully submitted to the laws of this country?

The answer is simple: NO, never, as if they had ever wanted to, they would have erased from their contracts the silly and inapplicable clause of submission to jurisdiction and applicable law to a foreign country!

In fact, Nykredit did not even register with the Spanish regulator but admitted and warned on their website, back in 2007, now conveniently erased (although not if you know how to dig out the information), the following:

“Please note that due to legal barriers, we currently only offer mortgage loans in France and Spain to Scandinavian retail customers”.

My clients are British…

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