A Cadiz court has taken on the case brought by a group of 33 British pensioners resident on the Costa del Sol against Lansbanki Luxembourg S. A.
The claimants accuse the bank of using fraudulent measures and misleading advertising to sell them a high risk mortgage product, equity release, as a result of which they are in danger of losing their homes in Spain.
The pensioners filed their collective lawsuit in the San Roque courts in 2008, as the majority of them live in that municipality. The extent of the fraud could amount to 40 million euros.
After accepting the case the judge has provisionally put a halt on any foreclosure proceedings on the claimants’ mortgages. Now all of the pensioners have been called to make a statement at the court.
The equity release products were sold to the claimants by financial brokers on the Costa del Sol and the contracts were drawn up with Landsbanki Luxembourg S.A., explained Javier Muñoz Cuesta, partner and co-director of the criminal department at the Martínez-Echevarría law firm.
The product involved a series of contracts that the customers, normally married couples, signed successively: a loan contract, as borrowers, with Landsbanki Luxembourg S.A; a life insurance policy with Lex Life and Pension S.A., a subsidiary of Landsbanki, among other insurance and investment agreements.
The lawyer acting on behalf of the victims said that they “did not really know what they had signed up for after the complex structure of contracts presented to them by the Luxembourg bank”.
He added that the clients were told that their capital had been invested in a policy that they all understood would secure their capital and that the investment portfolio would finance the mortgage payments.
Since 2008, these British residents, the majority in their 70s, have been living with the constant threat of eviction due to default on the payments of the mortgage that the bank itself should have invested to pay for the loan and the additional income promised.
The value of the alleged fraud could amount to 60 million if the Costa del Sol case is combined with the lawsuit filed by another 27 British pensioners in Denia, Alicante, who are also represented by the Martínez-Echevarría law firm.