Consumer Fraud

The following article defines and describes how to combat many aspects of consumer fraud, it was composed by Check Protect Investigate Ltd in order to advise some of their clients on the matters mentioned within…

To see it in full click here!!

FOS warns ‘fake Ombudsman’

The financial Ombudsman (FOS) has warned the public that fraudsters have been targeting consumers under its name to get them to reveal their personal information. (Name, address, card details etc.)

In a note on the FOS website, they stated that they are aware that consumers had been cold-called and received emails by the scammers, who had used its name, in a bid to persuade them to reveal their personal details and financial circumstances.

The service also warned of ‘number spoofers’ – fraudsters using technology to make it took like an Ombudsman number was calling.

The FOS have reminded consumers that they would never email or phone people out of the blue to ask for personal details or financial circumstances. They would only contact people if they have already been in touch to register a complaint.

Just to make you aware, the Ombudsman is a free service. They would never ask you for money and they don’t pay you compensation directly. If the Ombudsman have investigated your complaint and upheld it, they may tell the business that you are unhappy with to pay you compensation – but the money won’t be paid out by the Ombudsman.

The Financial Ombudsman asks people who think they have been contacted by scammers to phone it directly on 0300 123 9 123.

You can also get in touch with the national fraud and Internet crime-reporting center Action Fraud.

http://www.actionfraud.police.uk/report_fraud

Consumers can protect themselves from fraud by never revealing any personal or financial details unless they are absolutely sure the person is who they say they are.

Spanish Mortgages – Beware of the Abusive Floor Clauses!!

Do you have a mortgage loan?

Do you monitor when your interest rate is reset?

Have you checked the outcome of this reset and noticed that recently, despite the low interest rates on the market, your mortgage rate has a floor and doesn’t go below that?

If so, you have a ‘floor clause’, which could be deemed as, illegal but some people are not aware of it. In whichever case, the difference between the interest you would pay if the floor clause was not applied and what you are effectively paying, can, in the end, amount to quite a considerable sum.

A Spanish mortgage loan with a variable interest rate will usually specify a benchmark rate (indice de referencia, in Spanish) – typically the Euribor rate – upon which interest repayments are calculated, plus a margin for the bank (known in Spanish as diferencial)

In some cases, an additional clause is included, so that under no circumstances can the interest rate go below a certain figure (e.g. 3 or 5%), regardless of market fluctuations. This is an example of a typical floor clause.

Floor clauses can be problematic because if the benchmark rate is low, the mortgage debtor will not be able to benefit from low interest rates if he or she has a floor limiting the decrease of their own rate.

As you might probably know, on 9 May 2013, the Spanish Supreme Court declared certain floor clauses illegal. Banks were ordered to remove the clauses and to issue a refund to the claimants from whom excess interest payments had been collected.

Since then, courts all over Spain are following suit and declaring certain floor clauses illegal. In order to assess whether or not a floor clause is illegal, courts look at a number of factors, including whether:

a)Debtors were led to believe that the mortgage loan had a variable interest rate in which the decrease of the benchmark rate would lead to decrease in the value of money;

b)Enough information was provided tat the floor clause was a crucial element of the contract;

c)Debtors were given the false impression that the presence of a floor necessarily implied the fixing of a maximum interest rate;

d)The floor clause was inserted amidst an overwhelming amount of data thus disguising it and distracting the clients attention;

e)Different possible scenarios were explained to the client, before signing the contract, as to how the interest rate could be reasonably be expected to fluctuate at the time of taking out the mortgage;

If you think you may have been a victim of a floor clause in your Spanish mortgage, then please do not hesitate to contact us on our free number 800 600 125 – our Spanish Lawyers will review your deeds for you and give you an answer within 24 hours as to whether your Spanish mortgage contained an illegal floor clause.

The buying process in Spain

Advice so that you are prepared rather than deceived!

The buying process in Spain

Though they earn their fees from private individuals and companies, notaries are essentially public officials who play a neutral role in drafting and witnessing many types of contracts in Spain. Their job is to ensure that both of the parties within the agreement understand the terms of the contract, that the terms of the contract do not contravene any laws, and to ensure that the appropriate taxes generated by the transaction are paid.

Why do you have to sign public deeds before a notary? 


If or when you buy a property in the UK, you exchange contracts, pay the merchant, get the keys and then the property is officially yours, after which you are free to register your title in the land register. The big difference in Spain is that you can’t actually inscribe your title in the property register – Spain’s version of the land register – unless a Spanish notary witnesses the deeds of sale. Under Spanish law a notary’s signature is required to ‘elevate’ a private contract into public deeds that can be inscribed in the land register, so the bottom line in Spain is no notary signature, no inscription in the property register.

Is inscription of your title in the ‘registro de la propiedad’ really necessary? Theoretically, no it is not, as a private contract between buyer and seller is fully binding on both parties (though not on third parties). Some Spaniards, especially in rural areas, own property that is not inscribed in the register, thus saving on the hassle and expense (notary fees, registry fees and taxes) of inscription. And curiously there is much more property inscribed in the property register than exists in all of Spain, so something is not quite right.

For British buyers, however, it is crucial to inscribe their title in the property register, as it is the only truly secure form of property ownership in Spain. The first person to inscribe title to a property gets to keep it, which is all the reason you need. There are other advantages too, for instance protection from the merchant’s creditors and the capability to take out a mortgage against your property. So all buyers need to complete their purchase in the presence of a notary if they are to enjoy the benefits of inscription in the property register.

When can you sign?


It depends upon whether you are buying a resale property that already exists, or a new property from a developer that is under construction or off-plan.

When buying a resale property you can sign the deeds before notary at the first convenient time for you and the vendor. This is often between 1 and 3 months after signing a private contract. Be careful when buying resale properties from foreign vendors who have large mortgages: there is a small risk that they will take your deposit and may flee the country, after which the mortgage lender will sell the property to pay off the mortgage and you may be left with nothing. When the vendor is a foreigner with a large mortgage you should avoid private contracts with deposits and go straight to signing the escritura – the public deeds before notary.

When buying a newly built property from a developer you can sign the escritura and make the final payment once the property has been certified as duly completed by the head architect. Unless you have agreed to sign deeds for a property under construction, which is always best avoided, you are not obliged to sign the escritura until the developer can produce the ‘certificado de final de obras’ signed by the architect.

Preparing for signing


Whatever type of property you buy you should only sign the escritura once your lawyer has carried out all the final legal checks, for instance on the vendor’s title, debts and licenses, to mention just some of the necessary checks.

You also need to agree a payment method with the vendor before you turn up at the notary. Bank-guaranteed cheques issued by a branch in Spain are the preferred method, though it should also be possible to transfer funds to the notary’s escrow account. Banker’s draughts from banks outside of Spain are likely to be viewed with suspicion by many Spanish vendors, and may well be rejected. To avoid a crisis in the notary’s office just make sure the merchant is aware of and happy with your proposed payment method, and then get all your funds in place.

Also make sure you have the necessary documents with you when you go to the signing. In most cases you only need your passport, though it does depend upon the notary, and you should always have your lawyer clarify what the notary requires before you attend.

Though it is always best to attend the signing in person you can also have someone sign on your behalf by granting them a power of attorney. The easiest way to grant power of attorney is to sign one before a notary in Spain, though at greater expense one can also be arranged through the Spanish consulates in the UK or through a British notary public and Hague Apostille.

http://www.thenotariessociety.org.uk/

Everyone involved in the transaction – all the vendors, buyers, and mortgage lenders – have to be present in person or represented by powers of attorney at the signing of the escritura.

What happens in the notary’s office? 


Upon arrival you are shown into an office with all the parties involved to wait for the Notary. The Notary – who always exudes importance – will then breeze into the office, take a seat at the head of the table and start the proceedings.

The notary will then confirm the identity and other personal details of all the buyers and sellers present, and then read the deeds out loud. Some notary’s like to show off their English by giving a partial translation, though most will just read them out in Spanish. Whatever the case you need to be sure the deeds are correct before you sign them, which means having a translator present or relying on your lawyer. Some notaries will refuse to sign the deeds unless a foreign buyer has a lawyer or translator present.

The notary will also make certain legal checks, though these vary by autonomous region. As a minimum they should have request a property registry filing just before the signing to confirm the merchant’s title, and that the property is free of any (unexpected) encumbrances. This leads some estate agents to claim that buyers are perfectly well protected by the Notary and don’t need a lawyer. This is not so. In reality the Notary gives you little protection so you must be accompanied by an experienced and qualified professional when signing the deeds.

If nobody objects to the content of the deeds the notary will pass them around for signing by all parties, and confirm the payment of any outstanding amounts by the buyer before the keys are handed over. This is when you produce payments such as bank drafts for any outstanding amounts on the declared price (the price stated in the deeds less any deposits or down payments already paid). But now comes a very important point of etiquette: if you have agreed to pay a part of the price under the table, which you are strongly advised not to do, then never produce this cash in the presence of the Notary. Always wait until the deeds have been signed and the Notary has left the room before you bring out the envelope stuffed with cash. The vendor will then count out the cash in front of you.

After signing the deeds


After signing the deeds the property is all yours, though the taxes still need to be paid and your title inscribed in the property register. You will be given a copy (copia simple) of the deeds to take away after the signing. Each copy costs around 30 Euros so you should decide how many copies you want in advance. You can use the copia simple to do most things, such as set up utility contracts and pay taxes.

A few days later your lawyer will be able to collect the original deeds signed by the notary (copia autorizada), which are needed to inscribe your title in the property register. In the meantime the notary should have faxed notification of your purchase to the property registry immediately after the sale, thus blocking the register for 10 days and preventing anyone else from inscribing a claim to the same property during this period.

Notary costs


Notary fees are set by the government according to the number of clauses in the deeds and the declared value of the property. As an approximate guide they range from 0.1% of the declared price of a property (for properties of 400,000 Euros or more) to around 0.4% (for properties of under 100,000 Euros). If you use a mortgage then you will have to pay Notary fees on the mortgage deeds as well.

Power of Attorney

What is a power of attorney?

A power of attorney is a mandate which is given in writing before a notary, public and executed as a deed by the person who is giving the power of attorney, in favour of a third party (attorney).

It is a practical and common way of delegating authority. By virtue of the power of attorney, the attorney is legally authorised to carry out certain acts on the donor’s behalf, which will have legal implications for the donor. I.e. the person who is given power of attorney can attend the Notary if the donor cannot do so.

The identity of the donor will be always be verified by the notary upon execution of the power of attorney. At the foot of the document, the notary authorising the power of attorney will make a statement as to the donor understanding the contents and effects of the document and as to the document being executed before him.

What are the contents of a power of attorney?

The powers that are given by the donor may differ significantly depending on the transaction or legal act for which the power of attorney is necessary (civil or criminal litigation, property transactions, corporate transactions, inheritance matters, etc.).

Spanish powers of attorney normally give the donor very broad powers to deal with the specific transaction. For example, a power of attorney for the purchase of the property will often include clauses allowing the attorney to open, close and operate bank accounts, set up direct debits, make payments for the account, arrange utility contracts, pay taxes, submit forms and send and receive notifications to and from different authorities.

This is mainly done for practical reasons so that the attorney may carry out all the necessary completion and post-completion arrangements. It would be very inconvenient for the donor if he had to authorise each arrangement separately. However, the donor is always free to instruct the notary to limit the scope of the power of attorney as much as he wishes.

How do you arrange a Power of Attorney in Spain?

If you are in Spain, you can access this website which will show you where your nearest Notary is and you will be able to make an appointment at a time that is most convenient to yourself.

http://www.notariado.org/liferay/web/notariado/el-notario/quien-es-el-notario

You will need to explain to the notary’s clerk the purposes of the Power of Attorney and provide your and your attorney’s personal details (full name, passport or ID number, address, marital status). When you attend the notary’s office always bring your passport with you.

How to arrange a Power of Attorney in the UK?

Contact your nearest Spanish Consulate, they will provide you with a list of English notaries specialised in Spanish matters. You can visit this website below to find where your nearest notary is located in the UK.

http://www.thenotariessociety.org.uk/find_a_notary.asp

Roughly how much it costs?

A notary practising in the UK may charge in the area of £250 plus VAT for drafting a bilingual Power of Attorney and witnessing its execution by the donor/s.

If the Power of Attorney has already been prepared by a Spanish Lawyer, the notary would only charge for witnessing the execution of the documents and his/her fee may vary between £90 and £150 plus VAT depending on the area where the notary’s offices are based.

Please note that Powers of Attorney executed before an English notary will need to be legalised with The Hague Convention Apostille (at the Legalisations Department of the Foreign and Commonwealth Office) in order to be valid in Spain.

Your notary will be able to arrange legalisation but he/she will charge an administration fee (in the area of £30 plus VAT.) You will also be responsible for payment of the Foreign and Commonwealth Office’s fees which amount to £27 per document.

What Is Litigation…

In legal terms, litigation simply refers to the process of resolving a dispute through the courts.

There are different processes that the courts use according to the value and the intricacy of the claim.
Initially, all cases begin with a person who wishes to bring a claim because they feel that some civil wrong has been committed against them by another person – intentionally or otherwise.

The person who has been ‘wronged’ in some way is known as a claimant.
The person who has done wrong is a potential defendant as they may have to defend themselves against the claim brought to the courts by the claimant.
The Claimant and defendant will become what are known as parties to proceedings if the claim does reach the courts.

So what do you need to do first if you find yourself in a dispute with another?

There are obviously transparent steps laid out by the Pre-action Protocols and the Civil Procedure Rules. These rules control the steps that an individual should take, from the kickoff to the rules that the judges follow in the event of failure to obey these rules in full. It is advisable to consult a legal professional to deal with complex matters on your behalf.

To begin….

You have a problem, which may require the involvement of the court service in some way to assist in resolving a problem.

Before this can be dealt with at court, you must ensure that you have fulfilled any pre-action obligations laid out within the Pre-action Protocols.

All of the forms required to begin civil court proceedings can be found via the following link: http://www.justice.gov.uk/courts/procedure-rules/civil.

Depending upon what your issue is, you need to follow the appropriate protocol. In many cases, it is clear which protocol should be followed.
Where there is no clear pre-action protocol, you should follow the pre-action conduct steps.

When considering civil litigation, you should be aware of ‘The Overriding Objective’ as found in the Civil Procedure Rules.

The Civil Procedure Rules state that the courts must deal with cases justly, in a way, which is proportional to the amount of money involved, the standing of the case, the intricacy of the issues and the financial position of each party.

Further information can be found at: http://www.justice.gov.uk/courts/procedure-rules/civil/rules/part01 .

What does this mean to a potential party to proceedings?

It means that the court will ensure that any litigation cannot spiral out of hand in relation to costs and the issues to be decided.
It means that parties will be encouraged to put an end to disputes through alternative means such a mediation, arbitration and conciliation.
The courts will ensure that any claim is dealt with in a proportionate manner and that court time is not wasted.

It also means that there is a duty placed upon legal representatives and other persons involved in a dispute to act in accordance with the Overriding Objective at all times.

Any person who is considering seeking the advice of a solicitor and resolving their issues through litigating in court should be aware that very few cases actually make it to trial.

It is no great surprise, therefore, that around 97% of claims settle prior to a hearing after having been issued at court. To issue at court simply means to fill in a claim form and file it at court to officially begin the process of litigation.

This suggests that adhering to and abiding by the principles of the Overriding Objective will usually end up in a settlement out of court being achieved through alternative dispute resolution.

Before issue at court, there is a large amount of pre-action work which sets out to identify the issue/problem, collate evidence and documents and place the parties in a situation in which they know whether or not litigating through the courts is a sensible idea.

Advice should be sought from a qualified legal professional with the ability to advise on the best way forward in any matters, which may proceed to court.

If you think you may need assistance dealing with a litigation issue, contact one of the team at CPC Worldwide, we will assess all cases and provide initial feedback free of charge!!

Bankia Agree To Reimburse 200,000 Investors

State owned Spanish bank, Bankia has agreed to fully reimburse 200,000 investors  who bought €1.8 billion worth of shares before the company had a public offering in 2011.

The bank are giving the investors a three month window to claim back their original investment plus an additional 1% interest.

Bankia’s troubles in 2012 which almost lead to collapse following record losses of €20 billion led to Spain seeking a European bailout, which further impacted the country’s already severe recession.

A Bankia spokesperson stepped forward to say: “[Investors] will get their funds back in a period of time that we estimate to be no longer than 15 days after the claim is filed.”

“It will save them money by avoiding the legal process, or by reducing legal processes already underway.”

Bankia say that the decision to repay investors comes as a result of January’s landmark decision in favour of two plaintiffs who invested thousands in the bank.

The pair purchased €9,997 and €20,868 worth of preferred shares in the bank, which was formed as a result of seven failed caja – or savings – banks merging.

The Supreme Court ruled in favour of the duo after stating there were ‘serious inaccuracies’ in Bankia’s stock market launch prospectus.

Former head of Bankia, Rodrigo Rato is currently the target of several criminal investigations in relation to the case.

Background Investment Checks

CPC are now working with expert financial investigators who operate from two key locations in the U.K. and have associated offices in Spain, France, Brazil, Argentina and Dubai.

The team is able to conduct searches of property ownership, business ownership and the financial status of both businesses and associated individuals.

We can also have “background checks” conducted on any potential investment opportunity that you are considering.

The research will identify the credibility of the investments and outline the details and track records of the individuals behind the opportunities. In doing this, we aim is to assist potential investors to make an informed decision as to whether a particular investment opportunity is right for them.

To provide asset-checking services throughout Europe we can provide our report within a 48-hour timeframe. This will include official documentary proof of ownership.
To provide an equivalent service outside of Europe we require a ten-day turnaround from instruction.

Investment checking services and backgrounding are available now to both CPC clients and non-clients alike.

SPANISH MORTGAGE RECOVERY

The European Court have declared floor clauses in Spanish mortgages illegal. CPC and associated Spanish experts will review your deeds / escritura, free of charge to see if you are a victim of abusive clauses.

The European Commission has issued a damaging report for Spanish Banks who have for many years introduced floor clauses into their mortgage contracts.

These clauses (although common, are not used by all banks) set a minimum interest rate that clients have to pay even if the benchmark rate (Euribor) drops below that figure.

Spain’s Supreme Court has declared this practice “abusive” and so far has sentenced banks to pay back, but only the payments made since May 2013.

The European Executive disagrees with the setting of this date, stating that refunds must be made way back to the very first mortgage payment; obviously their rationale is that if the clause is void, it is void from the start of the mortgage.

There are 2.5 million mortgages with abusive clauses in Spain, is yours one of them?

We can help you NOW; our Spanish Legal Teams are on standby to advise if your mortgage carries these clauses and our reviews are carried out free of charge.

Mortgage – Cap & Floor Clauses

A floor clause (or “cláusula suelo” in Spanish), usually entered in a financial agreement in relation to a cap floor, refers to a specific condition generally included in financial contracts, principally loans.

As a loan can be agreed based upon fixed or variable interest rate, the loans agreed with variable rates are usually linked to an official interest rate (in the UK the LIBOR, in Spain the EURIBOR) plus an extra amount (known as spread or margin).

Thus, what the mortgagee actually pays the bank every month is: a portion of the capital plus the benchmark or interest reference plus the spread. The latter (the spread) is, from the bank’s perspective, the profit for lending the capital; from the borrower’s is the price of using the monies borrowed.

Since the parties will want some certainty on the amounts actually paid and received in case of sudden and sharp movements of the benchmark, they can, and usually do, agree a system by which they are sure that the payments will not go too low (on the bank’s side, so they count on a certain and regular profit) or too high (on the borrower side, so the payments keep in an affordable level all throughout the mortgage term).

This system of limitation of the interest getting too low or too high, is that one known as “floor and cap clauses”.

Stage 1

These schemes have been used for many years in banking, and have been deemed as a useful way to keep the risk and uncertainties of the signing parties of a mortgage at bay. However in Spain, from around a decade ago, the original scheme has been corrupted to a point in which it has taken the Spanish Supreme Court to issue a Judgment in order to protect the consumers / mortgagees from the constant abuses that the banks inflicted on them.

The problem started around the years between 2001 and 2003. In the beginning of the last decade thousands of properties were sold every year in Spain (many of them to foreigners, as second residences), and thousands of mortgages were agreed to finance those purchases. In a crazy push to gain new clients, the local banks had to look for fresh ways to attract new borrowers.

In the midst of what is now considered irresponsible lending, a way to appeal to the new applicants, to all those looking for offers on how to finance their new homes, was to offer mortgages with a ridiculous, almost symbolic, interest rate, linked to an also very low margin – ads reading “mortgage at EURIBOR plus 0.5 %” or very similar were typical for almost a decade.

The competition between the banks was fierce in offering lower and lower rates. Since the EURIBOR, or benchmark, was low (it started the decade at 3% and ended up in 2010 below 1%), a quick calculation provided attractive figures: the repayment costs virtually nothing in the medium and long term, and with a lease it would be a profitable investment.

Stage 2

At this point very few borrowers, if that, would read the whole mortgage agreement before signing it, let alone having it translated and fully explain by an independent accountant or solicitor. There were a couple of years at a fixed rate, typically 3.5 %, but that was just the beginning – for 15, or 20 or more years the monthly payment was going to be ridiculously low. The buyers jumped on these offers – at the peak of the property bonanza (between 2004 and 2006) one million properties were sold every year in Spain.

After signing the agreements, the borrowers started repaying the loans for the first couple of years, at the initial fixed rate, expecting a drastic reduction of the payments once they go to variable. However, after some years into the term of the contract, the monthly repayments went up. They called their banks managers commenting on a mistake in the last month’s charge, but the reply they got was that there was nothing wrong with the charges – these were correct, all made as per the agreement.

Stage 3

It was in the agreement. Going down to the smaller print of the mortgage deeds, conveniently hidden amongst the endless and tedious legalities (a mortgage agreement has normally about 50 pages of complex verbiage, hard to understand even for a Spaniard not completely familiar with the legal jargon), there was a clause that simply was to make that godsend clause reading “EURIBOR plus 0.5%” totally futile, completely irrelevant, as good as not actually entered in the contract. This was the floor clause.

No one mentioned it to the borrowers initially, but somewhere in the contract there was a clause setting the floor and cap levels. The floor clause meant that regardless how low was the benchmark or official mark linked to the mortgage (EURIBOR), there was a floor in place: a minimum interest to apply to the mortgage every month. For instance, if the floor clause is set at 4 %, it didn’t matter that the rate of reference rate would go down to 1%, because if the sum of this rate to the spread gives less than four, then 4 % would be the interest to pay.

The borrowers complained about it to their banks in two ways, closely related one to the other: firstly, it is unfair that they do not benefit from the cut in the interest rates of the reference rate (the EURIBOR has been below 2% for 4 years now, from 2009 to 2013. Currently it’s 0.5 %); secondly, it is there in the agreement, but nobody explained it clearly to them. However, the banks refused firmly to discuss it, retorting in all cases to the same reply – you signed the agreement freely, and now it’s final in all its clauses enforceable, there’s nothing they will do about it.

The Aftermath

Since the banks rejected even to consider discussions with their clients, so the claims started to reach the Courts, profusely, and all based on the same grounds; that something essential to the agreement, such as the cap and floor clauses, should have been explained precisely and more into detail, not left in a clause towards the end of the contract.

The first Judgments were dubious – it was a new circumstance, a dispute based upon complex, unique financial terms and conditions. Some Judges ruled favoring the banks – after all, there was an agreement and witnessed by a Notary.

However, the Higher Court, and eventually the Supreme Court, all ruled in the same direction in their pronouncements of the appeals (which came by the thousands): the clauses are obscure, very difficult to understand, hence they must be declared abusive and taken off the agreements.

Even if there was an agreement in place, and it was freely signed by the borrower, the general rules on financial contracts state that the essential clauses of an agreement (and the applicable interest rate is one of them) must be discussed individually and must be stated clearly in the document to sign.

Stage 4

The Supreme Court issued a historical Judgment (May 9th 2013) ruling illegal all floor clauses entered in the mortgage contracts from BBVA and two other Spanish banks. The conclusions of this document works like a handbook on the use of floor clauses in fair contracting:

The Courts must protect the weaker party in an agreement, usually the consumer against the lender. A clause is abusive when: a) it limits only the rights of the consumer, and b) it has not been negotiated and discussed individually between the parties.

The professionals (the banks) must prove that they offered to discuss the essential clauses individually, and has offered the consumer (the borrower) alternatives.

Any clause deemed abusive must be taken off the agreement, retroactively, i.e. not from the moment it’s declared abusive, but from the date the contract was agreed.