What counts as Deposit Product Mis-Selling in Spain?

Spanish law distinguishes:

1. Mis-classified deposits: Product sold as "deposito a plazo fijo" but actually participaciones preferentes, deuda subordinada, bonos convertibles - perpetual, not covered by FGD
2. Structured deposits: Deposit with derivative - "deposito estructurado vinculado a acciones Santander" - client loses principal if underlying falls
3. Ancillary abusive clauses in deposits/mortgages linked to savings: Clausula suelo, gastos hipotecarios, IRPH

All fall under MiFID I [2004/39/EC] -> MiFID II transposed via RDL 14/2018 + Ley Mercado Valores + Código Civil Art. 1265-1270 error vicio consentimiento.

Spanish doctrine: If bank fails to inform, error is presumed.

The jurisprudence on the nullity by mistake in the consent of contracts of swap and in particular, contracts subsequent to the incorporation of the MiFID regulations into Spanish law have been established by the Supreme Court ruling of January 20, 2014, which also specifies the scope of the financial institution's duty of information.

And:

It grounded that obligation in sectorial regulations, both pre- and post-MiFID, and even in the general principle of good faith under the Civil Code. The Tribunal Supremo decided that the absence of comprehensive information on financial products leads to mistake when it affects the investor's decision to contract, thus making the error essential.

Burden of proof is reversed: Bank must prove it informed. Statement of client saying "I understand" in contract is not enough if test is not done.

Legal Framework

• Art 79bis LMV + Art 208-214 RDL 14/2018: Duty to classify client - retail vs professional, conduct test de conveniencia / idoneidad
• Art 1266 Código Civil: Error nullifies consent when essential and excusable
• LGDCU Art 82-83 + Directive 93/13: Abusive clauses null
• Banco de España Circular 5/2012: Information duties for deposits

LANDMARK CASE LAWS - Tribunal Supremo

1. Preferentes - The Foundation - STS 244/2013, 18 April 2013 [RJ 2013/3387]

First Supreme Court ruling on preferentes Bankia.

• Client, 80-year old retail, told product was "deposito al 7% garantizado"
• Tribunal Supremo: Preferentes are complex product under MiFID, perpetual, not deposit, not covered by FGD.
• Bank failed test de conveniencia.
• Doctrine: Nullity for error vicio - Bank must prove it explained: issuer, perpetual nature, subordination, no FGD coverage, illiquidity.
• Consequence: Restitution of principal + legal interest.

Followed by STS 458/2014, STS 24/2016 - over 300 identical judgments. Bankia, Catalunya Caixa, Novagalicia condemned to return €6bn+.

2. Deuda Subordinada - STS 20 Jan 2014 [RJ 2014/354] - The MiFID Doctrine

The jurisprudence on the nullity by mistake in the consent of contracts of swap and in particular, contracts subsequent to the incorporation of the MIFID regulations into Spanish law have been established by the Supreme Court ruling of January 20, 2014

Key points:

• Defines duty of information: must be clear, impartial, not misleading, with sufficient advance
• Client's profile matters: elderly, low financial culture, risk-averse - error is excusable
• No need for expert report - lack of information presumes error

This became binding doctrine for all structured deposits.

3. Swaps / IRS / Clip Hipotecario - STS 559/2015

Swap sold as "insurance against rate rise" tied to mortgage deposit. Client lost €45k.

Tribunal Supremo: Swap is complex speculative product, not linked to deposit. Null for error.

4. Structured Deposits - STS 13 Sept 2017 [STS 3362/2017] - BBVA Deposito Estructurado

Deposito at 100% capital guaranteed if Telefonica shares not fall >30%. Client lost 40%.

Court: Name "deposito" is misleading. Must apply MiFID test. Bank did not explain derivative component. Null.

5. Clausula Suelo - Floor Clause - STS 241/2013, 9 May 2013 - BBVA, Cajamar, NCG Banco

Most massive litigation: 3 million mortgages.

• On 9 May 2013, Spanish Supreme Court in Judgment No 241/2013, ruled against BBVA, Caixa Galicia, and Cajamar in respect of clauses establishing a minimum rate below which variable rate could not fall - floor clauses
• Doctrine: Clause is not transparent if not comprehensible and client cannot understand economic burden. Null abusive under Art 82 LGDCU.
• Initially limited retroactivity to May 2013 based on legal certainty principle
• CJEU Joined Cases C-154/15, C-307/15, C-308/15 - 21 Dec 2016: Corrected Tribunal Supremo - The solution given by Tribunal Supremo supposes incomplete protection for consumers, and is therefore contrary to EU law - Full retroactivity: banks must return all money from day one. Cost to banks: ~€4bn estimated by Bank of Spain.

6. Gastos Hipotecarios - STS 23 Dec 2015 [705/2015]

Clause making borrower pay all mortgage setup costs abusive. Tribunal Supremo declared void. Later STS 44/2019, 46/2019 distribution: Bank pays 50% notary, 100% registry, 100% gestoria, 100% tasacion.

7. Bankia IPO - STS 23/2016, 3 Feb 2016 + STS 24 Jan 2016

Bankia sold shares as "deposito seguro - inversion segura". Prospectus contained serious inaccuracies - shares lost almost all value.

Tribunal Supremo: Null for error vicio + prospectus liability under Art 28 LMV. Investors can claim.

Following revision of Bankia's annual financial statements, it resulted that prospectus contained serious inaccuracies - this was conclusion reached by Spanish Tribunal Supremo

Led to 200k+ claims, €1.2bn returned.

8. Revolving Credit / Tarjetas - STS 25 Nov 2015 [628/2015] - Usury

Revolving interest 24% TAE declared usurious under Ley Azcarate 1908. Doctrine refined in STS 4 March 2020 - >20% usury if exceeds normal market rate.

9. Off-Plan Deposits - STS 21 Dec 2015 [STS 5263/2015] - Ley 57/68

Landmark judgment ordering banks to refund all large deposits paid in advance mainly by UK Buyers to developers, in order to buy off-plan properties that were never built

Bank where developer held account is jointly liable if did not ensure bank guarantee.

10. Procedural - STS 15 Oct 2024 - Bank Must Refund Scam First

Spain's Supreme Court has said banks must prove serious negligence, including in case involving Ibercaja customer who lost €83k - banks must refund scam losses first, prove gross negligence after

How to Win a Mis-Selling Case in Spain Today

Plaintiff strategy per Iberian Lawyer:

We are benefiting from provision in Spanish law that puts burden of evidence on to banks to provide documentation

You need:

1. Prove retail client - no MiFID professional
2. Prove product complexity - preferentes, subordinada, structured deposit, swap
3. Show no test de conveniencia/idoneidad or test done same day as contract - invalid
4. Show information deficiency - no risk document, no scenario simulation
5. Action: Accion de nulidad por error vicio Art 1301 CC - 4 years from discovery, doctrine says from moment client understands real nature, not from signing - so still open for many 2010 sales per STS Pleno 19 Feb 2018

Remedy: Nullity + restitution - client returns product + interest, bank returns principal + legal interest + costs.

Limitation: For floor clause, action for restitution imprescriptible per CJEU; for preferentes, 4-year limit restarted in 2015.