White BaosAbogados have extensive and successful experience in claims against banks. Today, we want to share a new court success. We have won on appeal, before the Provincial Court of Alicante, a claim for a mortgage swap or financial exchange of interest, against Bankinter bank. You can consult the court decision on our website.
What are swaps or financial interest swaps sold by Spanish banks?
Swaps, Clips, etc, they were sold by the Spanish banks to their clients, as something that assured them that if the variable interest rates on their mortgage loans rose, they would not be affected. But, the banks did not explain, that with these swaps, the variable loans are referenced to a fixed interest rate. Thus, although it is true that if the variable interest rate of the mortgage loan rose, above the new fixed rate, the bank would compensate the client, and the client would never pay more than the new reference rate. It is also true, that if the variable interest of the loan fell, the client had to pay the difference to the bank.
Thus, these products that were sold as insurance to customers, in the event of a possible rise in interest rates; they also had a risk, because in the event of a fall in the reference rate of the loan, the client must compensate the bank.
They are complex financial products
These products have been qualified by Spanish courts as complex financial products. Therefore, banking entities had to provide customers with sufficient information about the product, its operation, risks, etc.
However, banking entities normally did not provide clients with all the information required by the specific regulations applicable to this type of contract.
Burden of proof of Spanish banking entities
Thus, in these cases, it is up to the banking entities to demonstrate that they have complied with their legal obligations, and provided customers with the information set out in the regulations. In addition, banks have a greater facility to prove what has been agreed, and information provided to customers.
Error in the consent or nullity due to lack of transparency
Therefore, in these cases, when the bank does not provide sufficient information about the characteristics of the product, its mechanical risks, etc. And/or when the clauses of the agreement are not clear, the clients of the banks can request the annulment of the product.
Either by error or vice in the consent. That is, because they agreed to sign the contract thinking that the real characteristics were different. Due to lack of information.
Or also, nullity can be requested due to lack of transparency, when the client could not know reading the clauses of the product, the consequences of it.
Consequences of nullity
The Orihuela court in its court decision now confirmed by the Provincial Appeal Court of Alicante, has agreed, as requested by our law firm:
1. The nullity of the interest rate swap contract
2. The bank must return to the client everything paid by the client, plus interest.
3. And the bank must pay the court expenses of the client; lawyer, procurator.
If you want legal advice in Spain regarding claims against banks, contact us and we will help you.
The information provided in this article is not intended to be legal advice, but merely conveys information relating to legal matters.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
White & Baos 2022 – All Rights Reserved.
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