Brit expats in Spain sue Rothschild over mis-sold equity release schemes

Published:  13 Sep at 6 PM
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According to a recent article in the Sunday Times, a group of four expats living in Spain have filed a lawsuit alleging mistreatment in the matter of an illegal equity release scheme.

The lawsuit due to be heard in Britain’s High Court is being seens as a test case for more than 800 British retirees in Spain, Portugal and France who were drawn into remortgaging their homes in order to re-invest the capital in offshore funds. Representatives of the unregistered financial advice company Henry Woods, blacklisted from operating in Spain in 2003, persuaded expats across Europe the scheme would not only provide retirement income and free up capital, but would also reduce the book value of the properties thus mitigating inheritance tax liabilities, a strategy believed to be illegal uder Spanish law.

Henry Woods employees regularly held marketing events in popular expat communities, a ploy used in many other expat destination countries. In Spain, mortgages of up to 75 per cent of property values were taken out with investment bank Rothschilds via one Stephen Dewsnip, an employee of the bank and former director of collapsed Guernsey-based firm Provident Investment Funds. Provident’s parent company hit the US headlines recently for scamming investors out of $64 million.

Unsurprisingly, the insurance bonds into which the mortgage funds were channelled performed poorly, leaving those who’d fallen for the scam with little or nothing in the way of investment income. One couple now missing almost 50 per cent of their capital amount took out a loan of £247,500 and have lost £105,500 over the past 10 years.

Aspecta Insurance, the offshore insurance company which provided the life insurance bonds, was founded in 2000 as a subsidiary of a German company and is based in Liechtenstein. Its Bloomberg company overview page notes Aspecta has no recorded key executives, and the bonds are similar to those used by a number of Isle of Man and Channel Islands-based insurance companies also under fire for using illegally-working IFAs to mis-sell their expensive products.

According to a spokesperson for Guernsey-based Rothschilds, the bank simply operated as a mortgage lender, and bears no responsibility for either the mis-selling or the poorly performing bonds. The spokesperson added that borrowers were advised by IFAs in Spain, none of whom received commission from the bank. Victims, however, insist that financial advice and reassurance was given by the bank, along with reams of glossy literature.
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