The Latest Spanish Property News from Kyero.com
May 5th, 2006
Numerous foreigners resident on the Costa del Sol searching for ways to multiply their life savings have fallen into the trap of taking financial advice from unregistered, sometimes fraudulent, consultants. Advertising in foreign language media, the press and the radio, they offer their potential clients a return of up to 16 per cent on their capital in exchange for taking charge of the funds. Within a year the swindlers have wiped out all their capital.
The language barrier acts in favour of these illegal consultants, who are not on the register of the Spanish body for regulating financial advice, the National Investment Market Commission (CNMV). They target retired foreigners on the coast, enticing them with interest rates that are much higher than those offered by Spanish entities.
In order to defend themselves against this type of fraud a large number of Britons affected have now formed the Costa del Sol Action Group. Over 700 families belong to the group, claiming they have lost a total of 110 million euros to the tricksters. Lawyers, acting on behalf of the victims, have brought the matter to the attention of the National Court in Madrid.
The mechanics of the fraud are always the same. The foreigners, mainly British, fall into the trap with the enticement of high returns on their capital. They sign a contract for a high risk financial product with a foreign investment firm with no backing.
Since early in 2005 the CNMV has issued warnings on 15 occasions about consultants acting without authorisation who may be offering investment services. Four of them were in Marbella. The rest operated in Barcelona and on the Costa Blanca. Most of these businesses are based off shore and request that investors should make transfers to accounts in these areas or in Switzerland. Once the capital has been handed over it is out of the control of the authorities.
The British Embassy is aware of the complaints and has published a guide, along with the CNMV and the equivalent body in the U.K., the Financial Services Association, to alert potential investors to the risk.
Full story from SUR in English
