Scottish expat takes on Denmark’s biggest bank over equity release scheme

August 3rd, 2011
Story by Sean O'Hare | The Telegraph

Danske Bank, Denmark

Denmark’s biggest bank faces a criminal investigation amid claims it offered “illegal” financial products Photo: Francis Dean/Rex Features

Six years on, Mr Armstrong is forced to live with one of his daughters as he prepares to take on the bank that promised so much yet threatens to leave him penniless.

His lawyer is filing eight similar complaints against various Nordic banks on behalf of expats who bought into equity release plans in the false hope that they could avoid inheritance tax and enjoy a salary for life. He believes the true number of victims could run into the hundreds.

Scottish-born Mr Armstrong, aware that his daughters would eventually be liable to pay Spain’s top rate of 34 per cent inheritance tax on the €2 million home he owned outright in Malaga, sought the advice of an independent financial advisor known to advise British expat pensioners living on the coast.

The advisor, who was allegedly unauthorised to sell financial products in Spain, suggested Danske Bank’s Capital Assurance product as a means to reduce liability and introduced him to the local Danske Bank branch in Mijas. He too faces possible criminal investigations.

Mr Armstrong alleges that he was assured by no less than three Danske Bank employees that taking out a €1 million Danske Bank mortgage loan against his home and effectively indebting himself would reduce his daughters’ inheritance tax liability by half.

It was agreed that €850,000 would be used by Danske Bank to invest and the profits used to pay off the mortgage, while a €150,000 lump sum would be given to Mr Armstrong as equity release.

According to Mr Armstrong’s lawyer Antonio Flores from Lawbird Legal Services , it is illegal to indebt yourself in order to reduce your inheritance tax liability.

He said: “This type of product, peddled by unauthorised agents under the auspices of supposedly reputable banks to mostly British pensioners, is becoming more and more common and should be avoided at all costs.”

The Danske bank mortgage loan of €850,000, Mr Armstrong was told, would be invested in bonds, Swiss Francs and Euros.

Mr Armstrong said: “After the first year I realised that they had lost me £18,000. For the next five years Danske Bank continued to lose money and in 2009 I was told by an account manager for Danske Bank in Luxembourg that I should sell my property and pay the bank back the €650,000 they had lost.

“I refused, so in November 2010 Danske Bank issued a foreclosure on my house and also a repossession order through the local court due to take place last month.”

Fortunately for Mr Armstrong, his lawyer obtained a court ruling suspending the reposession following the lodging of criminal complaints against the bank and its staff.

Mr Armstrong has now been forced to rent out his home and resume his former job as a yacht captain in order to raise legal fees.

A spokeman for Danske Bank said: “According to the law we cannot comment on individual customer cases nor questions related to individual customer cases. We have no comment.”

The investigation continues.



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