Equity release schemes have been causing trouble and tragedies for decades. The UK had its share of this ca two decades ago but stronger regulation put an end to the abuse of these products by its sellers. Scandinavian banks in Luxembourg have been selling the same products in Spain, causing similar harm to clients as Landsbanki caused (except the Landsbanki harm was compounded because of the how the administrator of Landsbanki Luxembourg has chosen to operate.)
Equity Release Scheme Association, Erva, is an association that aims at bringing the nature of these loans to the attention of pensioners who might be tempted by “free” cash offers, where an investment then pays off the loan. Working with the Spanish lawyer Antonio Flores they have successfully stood up for their rights against banks selling these loans. Erva members have filed claims against both Nordea and Rotschild Bank ia for mis-selling equity release loans. It will be interesting to see if actions agains these two banks and Landsbanki will put an end to these type of loan offers.
Luxembourg, as other EU countries, is obliged to follow EU directives on customer protection. The question is how diligently it’s been implemented and adhered to.
“How stupid we were!” said one Landsbanki client at the press meeting in Luxembourg. The sad thing is that banks talk people into it, by promises that don’t add up. Elderly people, often facing bad health and worries about pension have proven to be an easy pray.
The press in Belgium and Luxembourg reported on the Landsbanki action and no doubt the case will be followed with interest by the media, the authorities – and the banking sector.
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