A group of several dozen consumers is demanding 375 million euros in damages from Staalbankiers, now part of Achmea. They bought mortgage loans based on the Swiss franc in the run-up to the financial crisis, which has nearly doubled in value since 2015.
The 45 consumers joined together in April this year to form an advocacy organization, Compensation Swiss Franc Loans Foundation (CZFL). They will litigate at their own expense. Chairman of the foundation is attorney Adriaan de Gier, mass tort expert and founder of claims organization Qollect.
In addition to Staalbankiers, the foundation will also represent the interests of a group of customers of ING Bank and of Mees Pierson (now part of ABN AMRO), who bought the same product. Total damages are estimated at 750 million euros.
Currency risk lay with the client
The mortgage loans were made around 2008. The very low interest rates and stable currency in the Alpine country made it very attractive at the time to finance in the Swiss franc (CHF). Until January 2015, when the Swiss central bank loosened the peg between the CHF and the euro, after which it nearly doubled in value. The currency risk of the loan lay entirely with the consumer. As a result, Staalbankiers customers must repay in euros up to twice the original loan amount.
Adriaan de Gier: “It’s almost getting monotonous: yet another complex financial product sold to consumers by a bank or insurance company, which in retrospect turns out to have been sold mainly in the interests of the provider himself. Such a loan seems to have manageable risks, but that is not the whole picture. There are major currency risks involved, for which, according to the European Court of Justice should have been given much better warning. The consequence is that the CHF element in the contract does not apply and the Swiss franc exchange rate difference is for the bank’s account.
The issue is playing out in more European countries. In Poland, the damage is even heading toward 22 billion euros. Swiss mortgage loans have been hanging around the necks of Polish banks in that country for years like a millstone, posing a major threat to the stability of the Polish financial sector.
CZFL sees the issue as an example of past irresponsible commercial behavior by banks and insurers. ‘Banks boast that they take social responsibility seriously. This also means taking responsibility for improper conduct from previous years. In this case, that means taking back these harmful products and compensating for the damage,” De Gier said.
Achmea, ING and ABN AMRO have been approached by several consumers in recent years to reach a compensation settlement. That did not bear fruit, the foundation said. However, new developments in European jurisprudence would greatly increase the chances of success of a class action claim on these products.
De Gier calls on those duped by the banks to come forward. “In the action against Achmea/Staalbankiers, a sizable group of customers of the bank has joined, so there the subpoena will go out soon. As for ING and ABN AMRO/Mees Pierson, the group should be even larger, so especially there it is important that victims join. For mass damage actions, a large group is needed to bear the costs.”