A bank will have to cancel a mortgage contract that it signed with a retired British couple, who live inMarbella, and pay them compensation. This has been announced by the law firm that represents the pair, Lawbird Legal Services. The ruling was made by the Court of First Instance Number 6 in the Costa del Sol town.
The plaintiffs’ lawyers, Juan Martínez and Antonio Flores, alleged that the basis for the couple’s contract with Banca Rothschild was false. The legal team based their case on three aspects. They said that the well-known banking conglomerate issued the product using a subsidiary company, which was never authorised by the National Securities Market Commission to operate in Spain. They also insisted that their 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 had also said that, once the mortgage was granted, the capital was retained by the bank and it forced the borrowers to subscribe to an investment policy with a third entity, consisting of a life insurance whose capital was not guaranteed while it was invested in derivatives and other complex high-risk products. The court ruled that the bank acted in bad faith, by not accurately informing the borrower, and found that the minimum standards of banking transparency were not met.
Lawbird Legal Services said that the investment policy should be considered null and void as that it is not life insurance, according to the Insurance Contract Law. In addition, other issues were argued, such as that the capital was not guaranteed and that the insurance company did not assume any risk.
Lawyer Juan Martínez said after the case that he considered that the court judgement to be “fair, not only because Rothschild operated illegally, but also because it avoided all transparency in contractual and informative terms.”