A fresh setback emerged in the market for selling a financial complex product when a client could not fully grasp its implications. The Provincial Court of Alicante ordered compensation of 48,294 € to an SME from Guardamar after a case involving a so‑called “clips” marketed by Bankinter SA. The ruling centered on damages suffered from hiring this product without clear understanding, highlighting a duty of care in disclosure and loyalty during the sales process.
The ninth division of the provincial court upheld the Elche Court of First Instance decision, which was previously agreed with the client, represented by Victoria Krotova from Sanchez Butrón Lawyers. Bankinter challenged that decision on appeal.
“Clips,” commonly known as “swaps,” are contracts designed to provide protection against rising interest rates. In theory, if rates exceed a preset threshold, the bank covers the difference. What many clients do not realize is that when rates fall and pass a certain limit, the client may be required to pay the bank a corresponding amount.
Interest rate hikes
According to the court’s decision, the bank itself initiated contact to offer the product, which was presented as a way to control financial costs. The initial months of 2008 saw Euribor at elevated levels, approaching 5.5%, and the institution believed it was offering a kind of insurance. The case notes, as stated in the sentence, that the client acted under this impression.
The real estate market later collapsed, and interest rates dropped. The swap began to operate in the opposite direction, causing economic damage a few years on. When the company finally reached out to Bankinter for resolution, the only remedy offered was cancellation with a liquidation payment of 48,294 euros. This amount was advanced by the bank to enable restitution, and the party pursued a lawsuit in 2018.
15,000 people in the community affected by ‘risk-insured’ mortgages
The defense from Bankinter argued that it was unlikely for a businessman to lack sufficient knowledge to understand the product. Yet the Court of First Instance, a view later affirmed by the Provincial Court, stated that a reasonable businessperson can run a company and possess knowledge about the professional sector to which the contract is directed, while being in the same position as any other party in finance or banking matters. This perspective underlines a baseline expectation of consumer literacy in complex financial transactions.
The Elche Justice City, home to the ninth division of the Provincial Court, stands as the backdrop for this decision. The decision emphasizes that a client’s delay in payment does not imply acceptance of the contract terms; rather, it underscores ongoing disagreement with those terms.
Risk free
The court also rejected the claim that years of payments effectively meant agreement to all terms. Instead, the ruling indicates the annulment decision clearly reflects the client’s ongoing objection. It notes that those responsible for the product previously offered only “risk-free” contracts, which the court reads as evidence that the operation of the “barter” process could be regarded as speculative. Consequently, Bankinter’s appeal was denied, and the client was awarded 48,294 euros plus interest and expenses, as recorded in the official judgment. Attempts to obtain an official valuation from the bank were not successful.