In the last three years, 2018, 2019 and 2020, the Bank of Spain has imposed fines of 37 million to 13 entities for not informing well about the conditions of the mortgage loans, for charging more commissions than due, for publishing an APR ( the rate that collects the costs of the loan) lower than the real one and for other deficiencies. Santander is the most fined, followed by ING and Bankinter. The supervisor has 110 inspectors who sometimes sneak into dozens of offices at the same time to observe how products and employee knowledge are marketed.
The crisis from 2008 to 2012 marked the management of the Bank of Spain after the incorrect (or fraudulent) sale of preferentials and mortgages with non-permitted clauses. In 2014, the Entities Conduct division was created. “We realized that bad marketing was a social concern, that it generated a lot of litigation and that it caused a loss of reputation for the sector,” admit sources from the body led by Pablo Hernández de Cos.
Almost all the largest banks are on the list of affected banks, with the exception of Banco Sabadell. Santander stands out, both for the fines it received directly and for those it inherited from Popular after acquiring it, as well as ING, Bankinter, CaixaBank and Bankia. In these last two cases, the fines are also higher because they have had to face those of acquired banks.
Entrances in the offices by surprise
The supervisor monitors the performance of the entities by examining by surprise how the products are sold. At a certain time, dozens of Bank of Spain inspectors enter a network of branches of a specific entity. They know exactly what they are looking for from previous customer complaints or previous investigations. They identify themselves and ask for the director. If not, by the second highest ranking.
And the investigation begins in situ, which is a key system to detect bad practices, point out supervisor sources. What do they seek? “From whether the commissions are clearly stated on the board, how they have the advertising placed and what it says, what papers they give to customers to inform them of the products … to the knowledge that employees have about what they are marketing and if they know the codes of good practices ”, point out from the supervisor. At other times they do not look for an entity, but how a product is placed in different banks.
“It is about obtaining clear documents, such as information prior to contracts because the standard indicates what requirements it must have and if it does not comply, it can be sanctioned without discussion,” they indicate from the Bank of Spain. They also investigate how loans are paid off or how contracts are modified. “You have computer systems in which thousands of data are dumped and we know what the correct pattern is. If it doesn’t match, the alarm goes off because someone is doing it wrong, ”according to the supervisor.
Lowering the APR: a mistake that goes against the competition
Another common topic is how the Annual Equivalent Rate (APR) is calculated, which must include a series of commissions that are stipulated. “We have seen that some banks do not include all costs and therefore misinform the customer. Furthermore, their attitude goes against free competition because they mislead those who compare the costs of a loan. It is a serious problem of lack of transparency ”, they add.
These inspectors depend on the Department of Conduct of Entities, created in 2014 after the scandals caused by the incorrect (sometimes fraudulent) sale of preferential or mortgages with non-permitted clauses. “We realized that poor marketing was a social concern, that it generated a lot of litigation and that it caused a loss of reputation to the sector, which is an important issue,” they admit in the body led by Pablo Hernández de Cos. They also monitor advertising, but admit that there are no penalties in this field. “Banks act fast. Two days after the complaint they remove the poster or the advertisement and there is no sanction ”, they acknowledge. “It’s what the law says.”
They do not resort to save 40% of the fine
Entities do not reoffend. They know that if they did, the fines would be higher, and they could not benefit from the 40% reduction in the amount of the penalty, as they do in most cases. What happens is that sometimes they change the reason for the violation. The Bank of Spain does not use the “mystery customer” system, that is, an inspector posing as a customer. “This issue was studied but it was discarded. It is better to identify yourself ”, they point out.
Once the file is drawn up, it goes to the Legal Department, which has a Chinese wall. That is, they are isolated and they are the ones who propose the sanction, which is approved by the executive committee of the Bank of Spain. From there, the bank can pay and obtain a reduction of up to 40% of the amount, as it happens most of the time, or appeal. The entities do it in the special courts on the mortgage floor clauses, despite the fact that they lose 95% of the cases, something difficult to understand. “They believe that it is their duty to the shareholders because they are convinced that they have marketed the mortgage well,” they wield from the supervisor. But in these cases, few are those who resort.
Santander, the most fined
The highest sanction corresponded to Banco Santander for a total amount of 6.4 million, which was divided into two: the first of 3.2 million for “having detected non-compliance in commissions for early repayment and compensation for interest rate risk, commissions due to novation in term extensions and interest rate rounding ”.
Another of the same amount was imposed on him for breaches “the delivery of the pre-contractual information, the content of the settlement documents in anticipated cancellations, the debit of commissions in the novation of operations, the calculation of the APR and the contractual documentation.”
The Popular received another two of 4.5 million, but for being “universal successor of Banco Popular”, Santander paid it. Made a serious infringement for carrying out prohibited operations related to “compensation and commissions in cases of early repayment and application of interest rate rounding clauses”. In total, Santander has paid 10.9 million.
In second place in the ranking is ING with 5.4 million in two fines. The first of three million fine “because the APR reported to clients was deficient for not including some of the formalization expenses borne by the client.” The other to ING 2.4 million – after the application of the 40% reductions – was due to not controlling “sufficiently the agencies that facilitate binding offers to customers.
Bankinter, 5.2 million for the APR and the agency
The third is Bankinter, which was fined 5.2 million for a serious infringement related to pre-contractual information, the calculation of the APR and the expenses passed on to clients for management services. He had a 20% reduction for voluntary payment.
In fourth place is CaixaBank with a penalty of 3.6 million for various irregularities committed in the mortgage market. It also makes reference to breaches “the delivery and the mandatory content that the pre-contractual and contractual information provided to customers must contain; the calculation of the APR; and the collection of commissions for services not provided ”.
BBVA was imposed 2.7 million for poor information, miscalculating the APR and the undue collection of cancellation fees. Bankia, which assumed the sanctions of the absorbed BMN, paid 2.1 million for “carrying out acts or operations prohibited by regulations of organization and discipline with the rank of Law or with breach of the requirements established therein.”
Unicaja, Ibercaja and Banca March
Unicaja was sanctioned with 1.5 million for “carrying out acts or operations prohibited by regulations of organization and discipline with the rank of Law or failure to comply with the requirements established therein.”
Ibercaja Banco has been the last to be sanctioned, with 1.08 million, for failing to comply with the regulations regarding the delivery of pre-contractual information and the calculation of the equivalent annual rate (APR) between 2015 and 2017. As reported by the supervisory body, the sanction was imposed last December, although it was made public days ago after becoming firm in the administrative process. The fine has a 40% reduction for prompt payment.
Banca March, with 525,000 euros because it was found that the necessary pre-contractual information was not delivered to the client in all cases, nor the APR. Cajamar Caja Rural Sociedad Cooperativa de Crédito, on which the Bank of Spain imposed a fine of 900,000 euros —after the application of a 40% reduction— “for committing a serious violation of the law on management, supervision and solvency of credit institutions ”.
Banca Pueyo received a sanction of 876,000 euros and Banco Pichincha 350,000 euros, both for lack “of transparency and protection of the customer of banking services. In last place would be Triodos Bank, a branch in Spain, which was fined 174,000 euros after the application of the 40% reductions for a serious infringement due to the lack of pre-contractual information on the operating expenses related to the calculation of the APR.
–
