TENS of thousands of Spanish consumers, most of them paradoxically right-wing PP voters, probably owe radical left-party Podemos a long-awaited recognition.
They will have benefitted from several rulings issued by the ‘Tribunal Supremo’ against banks and financial institutions in one particular year, 2015.
Podemos, a left-wing populist party that seeks to address the problems of inequality and corruption, including banking abuses suffered by ordinary citizens, was founded in March 2014 in the aftermath of the 11-M Movement.
Millions were galvanised around this idea of social justice and, within them, a good number of top judges and magistrates.
The Supreme Court (SC) was also swayed and 2015 saw the following ground-breaking rulings:
Single-premium or Whole of Life insurance policies: In February 2015 the SC ruled that life insurance policies which are nothing but financial investments, i.e. insurance ‘wrappers’, will have to comply with the same standards of protection of consumers as financial investments, irrespective of whether it is a named as an insurance product or service.
This implies a suitability check, sufficient disclosures and advice for the client to understand the risks and clear information on the product.
In March 2015, the SC ruled that any life insurance bond made up solely for the purpose of investment faces one very serious prospect: being declared void by Spanish Courts.
Already six cases have ended up with faux insurance policies being terminated on these grounds, with the effect that the premium is to be returned.
Off-plan property deposits: In May 2015, and in December 2015, the SC ruled that property developers are responsible ‘in any event’ of down payments made by consumers on off-plan properties, provided the bank was aware of the purpose of the payments.
Multicurrency mortgage loans: In June 2015 the SC ruled that multicurrency loans are deemed financial derivatives, which are complex high-risk financial products.
The implication of this ruling is that average consumers will be able to argue that if the bank did not provide them with correct and clear information prior to signing for this product, the bank can and will be held responsible for mis-selling. The same applies to consumer suitability checks.