Feels good to take care of your family’s future
A recent Supreme Court ruling (March 2015) has sent shock waves through the many insurers that are offering single premium life insurance policies. Whether named as unit-linked single-premium life assurance policy, life assurance bonds, capital assurance or any other more or less fanciful denomination, any life insurance bond that is made up solely for the purpose of investment faces one very serious prospect: being declared void by Spanish Courts.
But this ruling has not come from nowhere: for some years already the administrative section of the Spanish Supreme Court is applying a not-too-well know article of the Consolidated text of the Private Insurance Supervisory Act, which states the following:
Article 4. Forbidden transactions and sanction of nullity. It is forbidden for insurance companies, and its conclusion will determine its utter nullity and voidness, the following transactions:
a) Those that lack actuarial technical base
But what does the word “actuarial base” mean? Simply put, traditional actuarial base or science largely revolves around the analysis of mortality and the production of life tables, and the application of compound interest. Which is exactly what these “life insurance” policies, for want of a better word, actually lack.
The Spanish highest Court, in declaring the nullity of these contracts in at least 8 rulings, has argued the following:
“Judging by its features, this contract cannot be classed as an insurance policy but a capital investment”.
“In normal insurance death impacts the assurer in such way that, when a claim occurs, it is the company that suffers a loss”
“The evidence points to the existence of a financial investment accord that pursues a tax advantage”
“The blurring of the risk element is, in these contracts, complete and distorts the very nature of an insurance contract”
“If there is no transfer of risk from insured to insurer there is no insurance contract”
“It makes no palpable difference if the insured lives or dies”
“Where age or medical condition –absence of medical questionnaire being symptomatic- are not parameters of any interest, the contract is doubtfully an insurance policy”
“It is easily observable that the risk has been all but completely eliminated from these deals, in fact the health condition of the subscribed is indifferent, to the point of disregarding the medical exam.”
“The nature of financial product has been repeatedly concluded by Section 3 of the Supreme Court”
Judging by these conclusions, thousands of contracts signed by expats face a serious risk of nullity: to name a few, Lex Life/Altraplan’ life policies, Nordea’s Capital Managed Plan, Seb-Irish Life’s Spanish Porfolio Bond, Prudential’s Spanish International Prudence Bond, Old Mutual’s Executive Investment Bond, Danske Life/Danica Life…and there is no time limitation to being a claim.
The heading is a very pertinent one “FEELS GOOD TO TAKE CARE OF YOUR FAMIL’S FUTURE” Of course this is what every responsible person tries to do. Unfortunately these illegal schemes do exactly the opposite. I don’t recall seeing anywhere that these schemes were introduced as life insurance policies. This was a ruse to get people to sign up for what can only be described as an investment vehicle with a life insurance wrapper to avoid paying inheritance and wealth taxes. They were not sold as life insurance policies.
If I remember correctly a similar ruling was made in the UK in the early 90’s where the Equity Release schemes were first introduced using the proceeds of the mortgage to invest in various financial products, although I cannot recall if a life insurance policy was attached to these schemes. It was reported that the main culprit West Bromwich Building Society had to pay some £30 million in compensation.
What I don’t quite understand is why these Banks and Institutions did not thoroughly investigate the type of product being sold. Surely one would have thought that they would have commissioned a leading Actuary to cast their eyes over the product before they introduced it to Spain. Then again why should they bother. They were not counting on someone as determined as Antonio Flores of Lawbird Legal Services in Marbella to investigate all these claims in an effort to seek justice for the many thousand scammed by these banks.
Nordea Bank SA & Nordea Life & Pensions based in Luxembourg are a prime example of using the Life Assurance Wrapper to coerce victims into signing up. Interesting to note that Nordea Bank have now sold off their Life & Pensions division. Perhaps they saw the writing on the wall.
What now happens to those victims who have had their properties repossessed by Nordea Bank and other Institutions also those other victims who lost most of the equity in their homes by either having to sell at discounted prices after being threatened that if they did agree to settle with the banks they would have their homes repossessed. One would assume that they would be entitled to compensation and the return of the premium in full. Perhaps if Antonio picks up this post he will try to answer the question.
This apart, the rulings given by the Supreme Court and other courts is very interesting and gives many victims some hope, providing of course these can be quickly brought before the courts. It has now been over 10 years since the introduction of theses schemes in Spain and many of the retired victims will never see the conclusion to their troubles.
You raise an extremely important point with the question: –
“What I don’t quite understand is why these Banks and Institutions did not thoroughly investigate the type of product being sold?”
For thousands elderly people the regrettable answer is:- THEY DON’T NEED TO!
To avoid prosecution these scammers register a string of secretive, subsidiary shell companies in the Caribbean thereby hiding the names of the persons benefitting from the scam … And then the parent company, registered in dubious places like the Isle of Man and Luxemburg, are able to simply claim they have no knowledge of and connection with the fraudulent marketing of fraudulent products.
Sadly it is still happening and no one has, as yet, been able to stop them!
A very important ruling on behalf of all those scammed by Nordea Bank/ Nordea Life & Pensions based in Luxembourg and Nueva Andalucía, Marbella and the other offending Institutions This could really be damaging for the bank. Did I not read somewhere on Erva web site that nearly 100 victims had been identified in the Marbella area alone?
The question is what actions can the lawyers take to get justice. For example in the case of the Nordea scheme the terms and conditions were exactly the same for everyone. This being so can Antonio Flores for example start a class action on behalf of all the victims and just add the names of everyone that were enticed into their scheme. If this happened in the UK the courts ruling could be for the banks to compensate all the victims as was seen recently in Payment Protection Insurance (PPI) The scheme itself was ruled illegal and the banks ordered to pay compensate everyone. Also the same would apply if such a ruling was made in the USA. I was under the impression that there was no such thing as a class action in Spain.
All victims who have subscribed to this type of scheme, should get in touch with their lawyers or contact Antonio at Lawbird.
The Isle of Man based Premier Group, infamous for its SITIRS equity release scam, ALSO deprived elderly people of their life savings via their high risk “Premier Low Risk Fund”, a collective investment scheme comprising an assortment of with-profits endowment policies which are life insurance bonds made up solely for the purpose of investment return … another financial life product which can now look forward to the “very serious prospect: of being declared void by Spanish Courts.”
The Isle of Man based Premier Group is already facing legal action in a trial at the Bilbao Courts scheduled for 14 July this year where, according to the claimants’ writ, the Premier Group, whilst lacking permission to operate in Spain, orchestrated the marketing and sale of Premier “SITIRS” – a financial product for inheritance tax mitigation purposes.
Meanwhile the Isle of Man government and regulatory authorities do/say nothing, which begs the question just how many other financial deceptions are being conducted from this secretive, tax haven.
Do NOT on any account invest or bank any money in financially obscure and shadowy places like the Isle of Man, Guernsey and Luxemburg – you may never see it again!
A pretty concerned SEB Life International has been quick to issue a statement on the matter:
[…]
As a result of this we instructed our lawyers to investigate the matter and its effects on our policies etc, and we still have a clean bill of health. The contract complies with the laws and the article is certainly a typical action group type of thing.
The important issue is that the death cover is based on a actuarial basis and is covered by the life assurance company, which we do.
The case the ruling was in favour of was a specific case, where the ‘insured’ amount was 0.003% on a 2m contract.
The DGS have also been contacted and they have not issued any public criteria or opinion on the matter. If it were to change going forward ( 101% is acceptable throughout Europe ) we would be able to alter accordingly. In Holland a few years ago they insisted on 110% death benefit, which we put into our contracts, and then this was challenged in court and it reduced to 101% again.
All of these “fancy” banks and financial product/fund providers employ hardened liars to both sweet talk the SALE of their fraudulent products (all premeditated to rob the customer and none to reward them) and subsequently to dispense long-drawn-out EXCUSES when things inevitably go skewwhiff.
The financial services industry is corrupt from side to side and top to bottom and that includes the detestable “regulators” who also play a role in keeping a lid on customer complaints.
Every year hundreds of thousands of people, often the elderly, are robbed by this thieving scum who have no principles or morality. Keep your money well away from them or you will probably never see it again – hiding it under your bed is infinitely safer than allowing them to have access to it.
Reminiscent of the “Lincoln Savings” scandal another dodgy investment product which went broke (1989) for $4 BILLION. The “Lincoln Savings” Training Manual advised its con artist sales advisors to:-
“Remember that the weak, meek and ignorant are always good targets.”
Best advice is:- “Remember, if you value your lifetime savings NEVER allow a financial advisor into your home.”
https://en.wikipedia.org/wiki/Lincoln_Savings_and_Loan_Association
The “Panama Papers” are revealing yet more damning evidence about the evils of “Tax Havens” and the companies and individuals, including David Cameron’s father, who are using/used these sinister places to evade paying tax via a labyrinth of secretive shell companies..
The Isle of Man government shelters the activities of both corporate and individual tax dodgers – and the financial product providers involved in helping them break the law.
For example the Premier Group (SITIRS) used its base in the Isle of Man to set up shell companies in the British Virgen Islands to host their marketing activities in Spain. Activities which include, illegal sales, miss-selling financial products and misrepresenting their “agents” collaborating in selling them.
Mostly to unsuspecting pensioners!
As others have already observed on this blog… the governments in places like the Isle of Man, allow companies registered inside their jurisdiction to operate complex webs of secretive companies making it almost impossible to bring them to account. Anybody who values their life savings would NEVER bank or invest in these places.
Today the Chief Minister of the Isle of Man, Allan Bell, announced that:-
“The Isle of Man is not a place where criminals can find a welcome”.
Several things are disingenuous about his statement, amongst them….
1) Criminals pass off their shenanigans from the Isle of Man to blind trusts and secretive shell companies which they register and remain undisclosed on Caribbean islands. Meanwhile back on the Isle of Man they deny ownership of these companies/trusts and thereby appear to be operating legally.
2) The Isle of Man government use the islands financial regulator, the Financial Services Authority, as a convenient black hole into which any awkward “problems” can be buried to appear several years later (if ever) dissolved and glossed over or exonerated by means of perfunctory “investigation” and biased interpretation of facts.
Mr Bell’s claim is legitimate only if people accept that criminals will enjoy a warm welcome on the Isle of Man providing that they and the Isle of Man government can always ensure that they are not discovered.
Never transact any financial business on the Isle of Man … you may not be dealing with honest people!
Why has the press not picked up on this? These insurance bonds are sold by their thousands to expats as a way to get them to invest savings and pensions into funds and structured notes for high commissions.
Is something going to happen as a result of this or not?
Good question Brian!
There is little that can be done because these tricksters base themselves in lawless tax havens, such as the Isle of Man, Guernsey and Luxemburg, where neither the UK or Spanish regulators have any jurisdiction – and in the absence of any lurid prosecutions to report the “Press” shows little interest in reporting the thefts..
The tricksters recruit con men who receive high commissions in return for “marketing” their scams to pensioners (in Spain for instance) who are fly-by-night opportunists who vanish as soon as anyone gets on their trail.
The swindle is as slippery as a bar of soap – but thankfully at least some of them are now facing prosecution.
As most followers of this site know Nordea Bank in association with Nordea Life and Pensions both domiciled in Luxembourg sol such a scheme. Why then cannot one present this scheme to the Supreme Court and ask foe a judgement.
As most followers of this site are aware Nordea Bank in conjunction with Nordea Life&Pensions bother domiciled in the same building in Luxembourg launched and sold such a scheme to many clients in Spain. Why therefor cannot this scheme be submitted to the Supreme Court for them to rule on it.
Nordea Bank S.A & Nordea Life &Pensions S.A both operating out of Luxembourg sold such a scheme in Spain. Why cannot this be presented to the Supreme Court for a ruling.
Sarah,
This will indeed be presented at the Courts, with the aid of recent case law on the so called “unit-linked life insurance policies”.