If Inheritance Tax savings was not enough enticement -or more accurately, as Steve Dewsnip tells us, it would save your home from the predatory Spanish Taxman– , the perfomance of the deal was presented as being so good that you would end up having that extra generous income by putting “your bricks to work for you” (Allan Graydon).
The attached is a brutally misleading illustration that, additionally, omits any reference to adverse market movements.
But the banks rationale was different: why would you want to put your customers off buying into the product if it was working for the bank? At the end of the day, if it all went tits up banks would argue that the customers could and should have “gone elsewhere to get accurate advice” (Nordea Bank Ipse dixit).
Rumour has it that for someone somewhere in the mountains of South Cordoba…it did actually work for a few months. The ERVA investigations teams are keen to meet this endangered specie…
(the attached was given to a Rothschild customer).
Well I must say this seems to be a wonderful scheme and I can understand why so many people were taken in. However when one understands that the majority were unsophisticated (in investment terms) and retired of pensionable age they fell for it. I see no mention on this worthless sheet of paper where the tax calculations come in. They have not mentioned that tax would be payable on the interest gained if a Spanish Tax Resident. Neither is there any mention on the rate of interest payable on the mortgage loan, which I would calculate at say 5% + 1% commision over this bank to bank lending rate. No doubt tampered with, be it in Swiss Francs, Euribor or Libor. In fact you would need a return of 9% as was depicted in this document for the scheme to have any chance of success. Perhaps this 9% was a number picked out of the heavens for this reason. I doubt that this fund had achieved anything like 9% over the previous 10 years, so how in the name of the good Lord can they justify this type of fraudulent statement. The truth of the matter that this could never have worked and should never have been sold on these merits alone. Now lets not forget that this was secondary to the reason why people entered into these schemes. The first and most important poit to everyone was the fraudulent way they were told that there would be no Wealth Tax or IHT taxes payable. These statements were made by the sales people on behalf of the banks, backed up with letters, documents, sales & marketing brochures and the like. We have seen from the posts and comments made on this web site and always backed up with supportive documentation that these schemes are nothing but a scam.
Harry, have you thought that the 9.25% is net of the interest paid on the loan. If that is the case then this scheme would have to achieved between 15% to 20% interest on the loan. I am not an investor, lawyer or accountant, but I am not stupid. It is beyond the realms of possibility that this fund had made these sort of gains over the previous 12 years, so how can they assume that it would over the next 10 years. Take into consideration all that we have seen on the erva web site. How many instances have we seen that these investments are NO to LOW RISK. It is beyond the stretch of imagination that NO, OR LOW RISK investments could ever achieve a 15 – 20% return or 9.25% in the lower case. In fact the investments would have to be HIGH RISK or SPECULATIVE even then it simply could not be achieved. Could one seriously believe that these products could be sold to retirees on a pension with their homes at stake, when if things (which they did) went wrong they could recuperate their losses. This is predatory selling at its worse and fraudulent. I agree with Harry, this apart from the tax angle would in my opinion be fraud.
What about the people they tried to con into signing over the funds remaining in their Personal accounts after the bank closed its doors to …. LEX LIFE!
They actually had the nerve to send out forms to place these funds in Lex Life, whilst they refused to transfer the personal remaining funds out of Luxembourg and then years later said there were no funds as WE had invested them and lost them!
However there are no orders produced, no proof of investment, no proper accounting. Just a statement saying the money is lost.
How can this money have been ‘lost’ when they sent out forms to transfer the remaining funds into Lex Life!
How can anyone be sure any investment was actually made to the company they said they were investing in?
No wonder Mme Hamilius has been told by dodgy Luxembourg to attack the 180 victims who are defending themselves and joining forces on an International scale!
Is Luxembourg suddenly waking up to the fact that without consumer TRUST there can be no banks and that the only reason we all went into these Equity Release schemes was because we trusted Luxembourg?
Lex Life was part of Landsbanki? What does European Law say about that?
What we don’t understand with these investments. Where were the banks compliance departments when the funds were going down the tubes. Did they switch investments to stop the loss. Apparently not. We know there was a melt down in 2008, however the banks should be structured to foresee this. In any event if we look at the FTSE index before the problems it was well over 6,000, within a short time it went down to under 4,000 a fall of over 30%. Now the FTSE is back to over 6,000 have the investments recovered by the same amount. Not to our knowledge, if so why not. One would have thought that a simple FTSE tracker investment would have done the trick. These youngsters who call themselves Investment Managers or Wealth Managers really haven’t a clue. There was no need for any margin call which trigered the cancellation of the contract, which in turn trigered the foreclosure programme that banks like NORDEA, LANDSBANKI & DANSKE BANK ( all operating out of Luxembourg ) started. Was it not just a simple excuse to get them out of these contracts, which they knew they could not substantiate. That being so, does it not strike you that these products should never have been on the market
Landsbanki, in any case was in dire straits before 2006 which is precisely why they devised the ICESAVE scheme to rake in cash.
Later they went hell- bent on the Equity Release scams and managed to persuade the Luxembourg Central Bank, based on the secured assets to give them around 2 or more billion Euros.
This is why these schemes were put into action isn’t it?
The bank was failing before 2006 and ICESAVE was put into place in the UK and then when that was in full swing they launched it in Holland.
Then the Equity Release was launched through Luxembourg because of their ‘special’ Way of doing business, one supposes!