Disputing the complexities of bank mis-selling – Araoz & Rueda

With Spanish courts often favouring the plaintiff, defendant banks have been feeling the pressure over disputes relating to mis-selling

Los bancos están sintiendo una gran presión en los juicios por venta engañosa de productos financieros. La comparecencia en los juzgados es algo que se debería evitar, opina Iñigo Rodríguez-Sastre, de Araoz & Rueda.

Araoz & Rueda is one of the few leading Spanish law firms that act against financial institutions in mis-selling claims. But unpicking the complexity of the issues involved in disputes has proved difficult, says Iñigo Rodríguez-Sastre, a litigation and insolvency partner at the firm.
“Before the financial collapse, Spanish banks were highly-respected and trusted institutions. This is now much less so due to the practices of some. Before 2008, some banks were selling products without giving all the correct information. People in the banks didn’t even know what they were selling.”
A lot of cases struggle with a lack of evidence. Unfortunately, many clients have not kept the correspondence that they had with the bank. “However, we are benefiting from a provision in Spanish law that puts the burden of evidence on to the banks to provide the documentation,” says Rodríguez-Sastre.
In most cases the clients want to negotiate, but if a bank puts up a fight then the client will go to court. Conversely, an appearance in court is something the banks should “avoid”, he believes.
“The courts are asking: ‘Was he a professional investor? What has been the behaviour of the bank?’ In most cases they have found that the clients were not professional investors and the products were not suitable for them.”
Claimants have a four-year period in which to enter a claim and with most of the cases currently on Araoz & Rueda’s books from products sold in 2007-08, many  disputes have an imminent expiry date. What disputes will now begin to appear will depend on the outcome of the financial crisis, believes Rodríguez-Sastre.
“Previously we were seeing a lot of M&A disputes. But we are likely to see less of these. It is insolvency that will drive firms’ litigation departments in the future.”