Archives for September, 2011

The Equity Release Victims Association Up and Running

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The Equity Release Victims Association (ERVA) – (www.erva.es) is now up and running. Having been formally incorporated last Wednesday, through a Marbella Notary Public, it has, among its aims, denouncing the magnitude of the infringements committed by a number of banks, mostly Scandinavian who, in clear breach of applicable legislation (regulatory, consumer protection, civil, banking, financial, and not the least, ethical), devised a tax-evading scheme that would be offered to pensioners to profit from them, using the illicit excuse that it was suicidal not to have a mortgage registered against their properties.

The ERVA will be formally filing claims with the appropriate Government offices, requesting formally not only that these products are banned in future but also, that the banks that offered them are disciplined in accordance to the seriousness of the offences committed. Of particular importance are:

  • Denunciation at the Spanish Prosecution Office (Fiscalia), requesting that a full investigation is conducted into the alleged tax-evasion proposition that constituted the main selling feature of these Equity Release schemes, and consequently, the well-defined target market this scheme was aimed at: financially conservative and vulnerable pensioners owners of an unencumbered retirement homes. Equally, of great significance is the financial state these schemes have left countless numbers of victims, as well as the major implications for their state of mental health and well-being  (typically, the infliction of mental and emotional anguish of being deprived of their life-savings ultimately and more immediately, a roof to live under). Even if these banks are no longer offering these obnoxious products, the writ will specifically request that the Spanish Prosecution Office, by application of article 26 of the 34/1988 Publicity Act, in relation to article 29, pursues the cessation action to prevent them from offering them in future.
  • Denunciation at the financial and insurance regulators (Comisión Nacional Mercado de Valores and Dirección General de Seguros), and the Bank of Spain (Banco de España), who will be requested that a thorough study is made into the validity of a contract of Equity Release, not approved for use in Spain under 2007 Reverse Mortgages Act and prior to its enactment, by the uses and customs of banking practices (as the Spanish equity release equivalent was not regulated formally until then although, it was specifically described as a product to allow asset “rich” pensioners access to this wealth, all the while having full guarantees of living in the property for the rest of their lives). The ERVA will specifically request that disciplinary and exemplary fines are imposed on the infringing banks, inclusive of a temporary suspension of their activities within Spain.
  • Denunciation at the Regional and National Consumers Association, to obtain a ruling condemning the publicity as false or deceptive advertising and fining these entities proportionally, in accordance to article 36 of the 26/ 1984 Consumers and Users Protection Act, applicable prior to 2007. Given the impact, relevance and geographical scope of the mis-selling of Equity Release schemes, the ERVA should request that the infractions committed by these banks are deemed “very serious” and the highest possible fines imposed (from €600,000 to 5 times the amount of the product mis-sold, as well the closing of the branch offices of the offending banks wherefrom the products were sold, for up to 5 years).

The list of proposed actions is not exhaustive and may include other proposals in the countries of origin of the offending banks.

Original Post: The Equity Release Victims Association Up and Running

Expat equity release victims take on banks

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The directors of action group Equity Release Victims Association stand to lose their homes Photo: Larry Lilac / Alamy

Tempted by the offer of a salary for life and an inheritance tax reduction, organisers of Equity Release Victims Association, Ian Sherdley, 69, and Euan Armstrong, 73, used their Spanish holiday homes as collateral to buy into the equity release schemes.

The schemes were sold by independent financial advisors working the expat communities along the Costa del Sol on behalf of Denmark’s biggest bank Danske Bank and Nordea Bank SA.

They were told that if they took out full mortgages against the value of their Andalucian homes, which were fully paid for, and then gave the money to the bank to invest, their inheritance tax liability would be reduced and they’d receive a small lump sum, as well as a monthly return on the bank’s investment which would cover the cost of the remortgage and provide a small salary.

Mr Sherdley, from Lancashire, and Mr Armstrong, from Scotland, followed the advice only to be later told by their Nordic Banks that the investments had gone badly, the remortgaged money had been lost and their homes suddenly belonged to the banks.

It is thought that there could be hundred of expats in similar positions across Spain and France.

A Spanish court has so far suspended Danske Banks’ foreclosure and repossession order, while a decision as to how the cases will proceed is expected in the near future.

According to Mr Armstrong’s lawyer, Antonio Flores from Lawbird Legal Services, the schemes were mis-sold, bearing in mind it is illegal to knowingly indebt yourself in order to reduce your inheritance tax liability.

He said: “We want to find out exactly how many of the schemes were sold, to who, and on what basis.

“As far as I can gather, retired expats were targeted because they had paid off their mortgages, so could use them as collateral and would be tempted by talk of reduced inheritance tax liability.”

Mr Armstrong added: “We encourage everyone who, like us has been sold one of these schemes to get in touch.

“Do not lie down and take this. These banks are making billions every year with your money.”

A spokesman for Nordea bank said: “We can’t comment, but we can say is that Nordea runs its business in compliance with local laws.”

A spokesman 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.”

If you have a story to tell about equity release, please contact sean.o’hare@telegraph.co.uk.

Originally published on http://www.telegraph.co.uk/property/expatproperty/8759583/Expat-equity-release-victims-take-on-banks.html.

Expats in Spain battle the banks

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UNITED: Euan Armstrong and Ian Sherdley have joined forces against the banks

Euan Armstrong, who the Olive Press reported is taking Danske Bank to court after it convinced him to use his two million euro Malaga home as collateral, has now teamed up with fellow expat Ian Sherdley, 69, to form the Equity Release Victims Association.
“We are forming an association to prevent these banks from robbing expats of their property by offering a pile of cash as part of an investment plan,” explained Armstrong, 73, who lives in Marbella.
“Equity release is not safe and a loan against the property with the idea of hiding the money in an offshore account or removing the money from the value of the property is certainly illegal in Spain.”
Sherdley, 69, from Lancashire, who is involved in similar scheme with Nordea Bank SA, added: “These banks are just trying to fill their coffers. So now we are working on getting a legal voice to pursue them through the criminal courts.”
The pair are being backed in their venture by lawyer Antonio Flores from the Marbella based firm Lawbird.
“The purpose of the association is to support people through their predicament,” Flores explained.
“Equity release is actually killing people, through such degrees of stress. Their livelihoods are being reduced and in some cases their lifespan.

“We have decided to do something.”

Now Armstrong and Sherdley are calling on other victims – believed to run into the hundreds – to stand up and fight these huge financial institutions.
“We ask everybody to join us who has or is suffering a similar rape and pillage from a Scandinavian Bank,” said Armstrong.
“Do not lie down but stand up and fight them.
“These banks are making billions of euros every year and stealing your money.”
When questioned both banks said they were unable to comment on individual cases.

Equity Release Victims Association Website Live

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We are proud to announce that The Equity Release Victims Association website is up and running. If you are a victim too, please feel free to join our community. We will post regular updates on any progress made by our association in the defence of our members’ interests, and in the fight we are carrying out against the unscrupulous banks which have orchestrated the equity release scam.

 

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