Protection for buyers of complex bank savings and investment products

Automatic summary, not yet reviewed

1. It creates the Commission for monitoring hybrid capital and subordinated debt instruments, attached to the Ministry of Economy and Competitiveness. It analyzes claims from customers who bought these products from entities in which the FROBFROB Fondo de Reestructuración Ordenada Bancaria (Fund for the Orderly Restructuring of Banks). The public fund that helps restructure or wind down troubled banks. holds a stake, and sends quarterly reports to the Congress of Deputies.
2. The Commission sets the criteria for FROB-participated entities to offer their customers arbitration of their claims, and establishes which customers with difficult personal or family circumstances must receive priority handling.
3. The Deposit Guarantee Fund may buy unlisted shares resulting from the exchanges of these products, at market price, to give customers liquidity. To strengthen its finances, member entities will make a one-time extraordinary contribution of 3 per thousand of their deposits, payable in two installments.
4. The Bank of Spain is designated as the authority responsible for ensuring compliance with EU Regulation No. 260/2012 on credit transfers and direct debits in euros, and the Minister of Economy and Competitiveness is empowered to grant authorizations and exemptions.
5. Customer service departments and customer advocates of financial institutions must handle claims related to commitments made under the framework of the Social Housing Fund.
6. Several laws are amended: the Credit Register may set different reporting thresholds depending on its purpose; Spanish insurers may use underwriting agencies on equal terms with European ones; and SAREBSAREB Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (asset management company for assets from bank restructuring). It manages the troubled assets, mostly real estate, of bailed-out banks. can carry out its functions more effectively.

Who it affects

• Retail customers who bought hybrid capital or subordinated debt instruments: Their claims can be analyzed by the Commission and submitted to arbitration, and the Deposit Guarantee Fund can buy the shares they receive in exchanges to give them liquidity.
• Credit institutions that are members of the Deposit Guarantee Fund: They must pay a one-time extraordinary contribution of 3 per thousand of their deposits as of December 31, 2012, in two installments.
• Entities in which the FROB holds a stake: They must follow the arbitration and priority handling criteria set by the Commission and provide information to the FROB.
• Payment service providers: The provisions of EU Regulation No. 260/2012 become rules of conduct and discipline, and breaking them is punished as a serious offense.
• Spanish insurance companies: They can now empower underwriting agencies to write insurance policies in their name, just like insurers from other EU member states.

Words worth knowing

Instrumentos híbridos de capital y deuda subordinada (hybrid capital and subordinated debt instruments)

Bank savings and investment products that mix features of shares and debt. If the bank gets into trouble, holders are paid after other creditors.

FROB

Fondo de Reestructuración Ordenada Bancaria (Fund for the Orderly Restructuring of Banks). The public fund that helps restructure or wind down troubled banks.

Fondo de Garantía de Depósitos (Deposit Guarantee Fund)

The fund that protects customers' money if a credit institution fails and that can act to keep the financial system stable.

Arbitraje (arbitration)

A way to settle disputes without going to court. A neutral person or body (the arbitrator) decides, and the decision (the award) is binding.

SAREB

Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (asset management company for assets from bank restructuring). It manages the troubled assets, mostly real estate, of bailed-out banks.

It summarizes the law as published in the BOE. It is written by artificial intelligence and may contain mistakes: the official text is what counts. Read the official text · How we make summaries