Fight bad banking practices
Luis Pineda, the Ausbanc president encourages clients with “abusive” floor clauses in their mortgages to try to negotiate with the bank or go to court
He says that rights are not gifted but conquered. The president of Ausbanc, the Association of Bank Users, encourages consumers to launch a “sensible battle” against banks to stop malpractice which, he claims, is on the increase in the sector. He encourages customers affected by floor clauses (which prevent many mortgage repayments from falling with the Euribor) to negotiate with the bank and, if that fails, to go to court.
Banking is one of the sectors with the most consumer complaints. Official figures show that claims have doubled this year.
It’s true that complaints, requests for information and reports have gone up. Before they were mainly regarding credit issues but now, in the light of cases such as Lehman Brothers or Madoff, there are more and more people who have put their money in banks that have given unsatisfactory results, or almost a fraud.
Which products should consumers be more wary of at the moment?
Financial products that have been offered as a way of not having to pay more if interest rates go up. However what happens is that they end up paying more when the interest rates go down. This is due to what is called a’ collar’ or ‘floor’ clause which means that now, when the Euribor is at a historic low, they do not benefit.
Ausbanc has warned of the misleading commercialisation of interest rate swaps as if they were insurance policies.
The bank already knew that the rates were falling and, as when the rates fall the repayments are smaller, the banks sold their clients products that were to their disadvantage; they were going to have to pay much more. We call them “toxic” products because they are bad for clients.
More than 15,000 people signed this type of contract which prevents them from benefitting from the low Euribor. What can they do?
The first thing to do is to identify the malpractice. The second is to build up an argument and go to battle. At Ausbanc we have negotiations under way, lawsuits filed and court sentences that we have gained in defence of the clients. We deal with hundreds of queries every day and open dozens of case files.
But meanwhile the Euribor is still low but the pockets of many mortgage holders are not benefitting. What do you recommend?
Check why your repayment is not going down (whether it’s due to a swap, a floor clause or another reason), find out whether this is illegal or abusive, negotiate with the bank and, if all else fails, go to court.
Still on the subject of mortgages, users have criticised the difficulties they are having in getting credit. How do you think the situation will evolve?
The State has given the banks money, but no one knows what they have done with it, because the credit is not forthcoming. banks spend too much, they are really clumsy intermediaries. They are investing in stock market banks which have proved to be less than transparent.
Bank commission is another area that cause indignation among clients. On average reports show that we pay some 233 euros a year…
That is true and proves that the bank still abuses its position. Bank charges are expensive in general, as is the commission for returned payments. Rights are not handed to us on a plate; we have to conquer them. We need to start a sensible battle to stop malpractice.
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