The courts protect the consumer on the maturity of many complex financial products that they have contracted with the banks.
Structured deposits offer tempting opportunities can be reduced to zero profitability or loss of investment. Many consumers have felt cheated after the acquisition of a banking product, where the bank had confided that there would be no risk for the customer but instead, would bring a significant interest yield. The complex financial products (bonds, hedge funds, swaps, certificates, etc.) differ from structured deposits of principal guaranteed because they are not protected by the Fund Deposit Guarantee, therefore the risk of the product is evident since there is the possibility that the consumer may lose the principal investment during or at the end of the investment term. This is not only because of the financial structure of the same but for a hypothetical bankruptcy of the issuer.
These complex structured products are characterised by having a capital asset related reference, or the final performance of the product or the possible loss of invested capital. Many consumers have seen their investment lost due to the lack of explanation by the entity on the fate of the intended capital or the underlying assets used: from stock indices, mutual funds, exchange rates or interest and These products are hybrids consisting of two or more financial instruments: one bond combined with one type barrier in most cases.
Types of structured bonds
Among the types of structured bonds differentiate the following:
• Bonds 100% guaranteed capital at maturity : the safest in its class, as the investor risks only get a zero return in the worst case scenario.
• Without capital guaranteed 100% bonds due: they are the riskiest since the inversion is not only risk getting zero return, but the return on invested capital depends on the underlying asset.
• Mandatorily convertible bonds: without capital guaranteed investment with a term ranging from 3 to 5 years and pay a contingent profitability. Usually no conversion options are provided for the investor but on compulsorily reached maturity, the investor receives the shares.
If your institution sold you a complex financial product and you lost the investment due to lack of transparency by the entity, you have clear possibilities to recover your funds by filing a lawsuit .
The position of the courts.
The courts have ruled several times on the marketing of such products. The Supreme Court, in judgment No 564/2015 of 21 October, No. 489/2015 of June 13 and No. 398/2015 of 10 July referred to the duties of information about the risks and nature of the product and duties of customer evaluation, which means that in the order of acquisition of complex financial products “the customer acknowledges that they has been advised of the risk of the product and whether the investment in this product is suitable for their investor profile” is highlighted. The bank has the responsibility to prove that it complied with these requirements.
In addition, the Provincial Courts have also highlighted its position in favour of the consumer in the SAP Madrid, Section 9th of November 14, 2014, No. 600/2013 resource and the SAP Valencia No. 5927 of 16 September 2015. Both emphasise the lack of transparency by the entity when offering the product to the customer: in the case of the first sentence, the product was featured as one type medium low in risk, when in fact it was a very complex and high-risk product; in the case of the second points to the reporting obligations because it was not proven during the trial or you can check in any way that the entity will inform the customer of a business risk posed by this operation.
Regain your investment
If your institution sold you a complex financial product without you knowing the hazardous conditions that you faced if the the market was no longer favourable, you can recover your investment. Our multidisciplinary legal team, specialising in banking law, has extensive experience professionals to find the best solution for your situation. Contact Jaime Garcia for a free consultation for the study your case without obligation.
Jaime Garcia email: Jaime@ctizensadvice.org.es
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.