Bank ordered to cancel a mortgage and compensate a retired British couple in Marbella

The plaintiffs' lawyers insist that the bank acted illegally and in bad faith

Juan Cano / Álvaro Frías

Friday, 28 January 2022, 11:31

A bank will have to cancel a reverse mortgage it signed with a British retired couple. This has been announced by Lawbird Legal Services, the law firm representing the plaintiffs. The couple, who live in Marbella, will also be compensated.

The sentence has been issued by the Juzgado de Primera Instancia number 6 of the Costa del Sol town. The plaintiffs' lawyers Juan Martínez and Antonio Flores, alleged in their claim that the contract drawn up with Banca Rothschild was false.

They based their argument on three premises. One was that the well-known banking conglomerate placed the product using a subsidiary company, which was never authorised by the National Securities Market Commission to operate in Spain.

They have also insisted that the clients were led to believe that if they mortgaged their home (which was previously free of charges) they would avoid paying inheritance tax.

The law firm pointed out that, once the mortgage was granted, the bank retained the mortgage capital and forced the borrowers to take out an investment policy with a third party, consisting of a life insurance policy whose capital was not guaranteed as it was invested in derivatives and other high-risk and complex products.

The ruling by the courts considers it proven that the bank acted in bad faith by not informing the borrower truthfully. According to the same sources, the product was risky and complex, and did not comply with the minimum standards of banking transparency.

The firm has said that the investment policy is considered null and void as it is not life insurance according to the Ley de Contrato de Seguro. Other issues are also argued, such as that the capital is not guaranteed and the insurance company does not assume any risk.

Finally, the judge determined that the lack of authorisation from the lender was a violation of mandatory rules and that the product should therefore be considered null and void in its entirety. As a result, the plaintiffs would not have to return any of the eventual benefits and could claim any losses they may have suffered.

The lawyer Juan Martínez considered that the ruling "is fair, not only because Rothschild operated illegally, but also because it failed to provide any transparency in contractual and informative terms."

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