Carlos Baos – Know your rights

Challenging Bank-Imposed Insurance Policies. Know your rights.

If your bank coerced you into acquiring a life insurance policy or a similar financial product, when they granted you a mortgage loan, you might possess the opportunity to annul the arrangement and reclaim any funds you paid. This practice, commonly referred to as “tied sales”, often runs afoul of consumer protection statutes and is typically regarded as illegitimate.

Spanish and European legislation.

Directive 2014/17 and Spanish Real Estate Credit Agreements Law, both expressly forbid tied sales unless they manifestly grant benefits upon the consumer. Nevertheless, numerous financial institutions routinely fail to furnish adequate disclosures regarding these products, making the whole process unclear and possibly confusing.

Unlawful Methods:

Some Spanish banks not only make customers buy a life insurance but also ask for upfront payments, which increases the total loan expenses. This conduct is viewed as unfair, particularly when clients are deprived of the option to make the payments in instalments or to find alternative insurers. Transparency on the part of the bank is key, and unfortunately, it is often lacking in such situations.

Legal Precedents in Spanish Courts:

Divergent rulings have emerged from various Spanish Provincial Courts, and the Spanish Supreme Court has yet to issue a definitive pronouncement on the matter. Some judges have characterised the imposition of bank insurance contracts as abusive and null, emphasising the pivotal importance of transparency and informed consent.

Implications of this type of clause being considered null and void.

In the event that a contract is nullified, consumers may be entitled to the reimbursement of previously paid premiums. Including, of course, of any accrued interest. However, caution is advised. Each case and contract are different. And the resolution of each case is contingent upon a meticulous examination of factors such as transparency, alternative options, cost considerations, etc.

Conclusive Remarks:

Should you find yourself caught in a situation where your bank has compelled you to purchase an insurance policy without sufficient information or transparency, you must seek counsel from legal professionals. At White-Baos Lawyers we stand ready to assist you. Reach out to us without hesitation, we will study your case and offer your expert legal advice.

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Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185


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Written by

Carlos Baos (Lawyer)

Lawyer Carlos Baos has been advising on variety of expat-related legal issues for years and weekly column offers free weekly insights.