Some banking products are bound to trials centered around the lack of a valid, free and spontaneous consent in Spain.
Basically, the consumer or entrepeneur argues that the bank sold the product without the exhaustive, mandatory information around the intrincacies of the instrument, namely the interest rate swap (IRS) contracts.
However, the unanswered question relies elsewhere. Why did the bank offer the product, in first place? And why was it accepted?
Banks had mastered a malpractice through the commercialization of mortgages. They sold additional binded products, as multiple insurance and the like, which were another bleep in the total revenue.
This practice jumped to the derivatives market. The IRS was sold as your unique, distinct chance to renew your line to discount promissory notes, to get another year in your revolving credit account or some sort of reestructuration to your mortgage.
In fact, most of the IRS clients ended being the ones who didn´t need the product and the ones who coudn´t pay in a dreaded scenario of low interests, referenced to EURIBOR.
Spanish judges, or the majority of them, also neglect the fact that the banks could advance the nature of the financial crisis started circa 2008 so they covered the losses of their mortgages through their senior products and also the IRS products and their variants.
As a client, damn if I do, damn if I don´t.
The scenario is just brutal. I got to see mortgage contracts that included a collar, with a large discrepancy between the floor and the cap, and related to that contract, a supposedly non speculative IRS. That´s nuts.
Of course, the lack of a clear stance from the regulator and the mantle gifted by politicians set the terrain for a bleak future, as for the rights of consumers and small companies involved.
Some days ago, our Supreme Court, expressed that some floor clauses were void, only to sustain that the effects would be ex nunc, so the already paid money never leaves the bank´s pocket. It´s a sad day when financial stability overrides principles with more than two thousand years of validity.
Too big to fail, all over again.