Expats Fight Banks Over Equity Release Scheme

A Lawyer in Spain has launched a case against ten banks on behalf of Expats who are at risk of losing their homes.

London, UK (Pryce Warner International) November 18th, 2011 – Roughly 800 pensioners across Europe, mainly Spain and France, purchased equity release schemes that required them to re-mortgage their homes so the money could be invested offshore.

It was intended that this would reduce their tax liability and also provide an income to absorb the expense of the new mortgage.

However, the investments ultimately depreciated in value to the point where the banks are now threatening to repossess the investors’ homes.

A case is now being launched by a lawyer in Spain, Antonio Flores, against the banks that sold these schemes, as it is illegal in Spain to knowingly go into debt to invest offshore and try and avoid Spanish inheritance tax. Due to this, Flores is arguing that the schemes should never have been sold in the first place.

The banks include, Danske Bank, Nordea Bank SA and Rothschild.

A spokesman for Rothschild said: “Rothschild is confident that the Spanish courts will agree that there has been no wrongdoing on its part in relation to allegations being made against a number of banks by a lawyer in Spain. "Whilst Rothschild has previously provided loans to a number of Spanish property owners its role was as a lender only. The bank had no part in providing investment or tax advice to borrowers. The borrowers were advised by their IFAs in Spain, who received no commission from the bank.”

At present Mr Flores has taken the case to Spain’s high court in an attempt to get all the equity release contracts suspended pending an investigation into the banks activities.

Mr Flores commented: "Of course, the high rates of inheritance tax in Spain are a major concern to Expat British pensioners and these so-called financial advisors, many of whom were unregulated and took advantage of this concern.”

A recent case involving a British couple and the Icelandic bank, Landsbanki, was settled with the bank being ordered to return the couple’s home, clear their debts and pay €25 000 in compensation. It is hoped that this will set a precedent for the current case.

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By Aneil Fatania
Financial Editor
Pryce Warner International Group
For any corrections of factual information contained within our news items please contact our editor.
Email: af@prycewarner.com
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