Speech in plenary on mortgage legislation and risky financial instruments in the EU

Madam President, the origin of this resolution and this debate that we are having tonight is numerous petitions that the Committee on Petitions has received during the past few years. As Chair of this Committee I fully understand, and regret to hear of, the difficulties faced by petitioners. Most petitions concern the situation in Spain but the same problems are also known in other Member States.

The Committee on Petitions is the bridge between EU citizens and EU institutions and, as its Chair, I strive for the EU to better take advantage of citizens’ direct experiences of EU law and also the experiences of national implementation, because these experiences can help us as legislators to further improve future legislation. In this role of bringing the concerns of citizens forward to this House, we have initiated this debate tonight.

As I said, we have received a large number of petitions denouncing the violation of fundamental rights and infringement of EU legislation in connection with the lack of accurate consumer information related to practices in mortgage banking. Obtaining accurate information is crucial for making sound economic decisions, and of course vital when we talk about important personal investments for an individual citizen and his or her family.

These petitions highlight a number of abusive clauses and practices in the Spanish mortgage sector which have been identified by both national and European courts. A large number of citizens became victims of financial fraud as their savings banks sold them very risky financial instruments and they were not duly informed about the extent of the risks involved in the proposed investment; nor did the banks perform suitably tests to determine whether clients had the knowledge to understand the risk that they were undertaking. This has led to cases of terrible personal suffering and huge economic losses, where citizens have lost their home and all their life savings. Many tragedies have taken place before our eyes.

However, I would like to stress that the aim of this question and the discussion tonight should be seen in a wider perspective. Our aim is to raise awareness and seek clarity regarding a general problem of bad banking practices that can be found all over Europe, not only within Spain. I would therefore like to stress that transparency and informed consumer protection will be essential components if we want to combat abusive terms in mortgage contracts and thus strengthen protection for borrowers.

Nevertheless, on behalf of my committee, I would like to ask the Commission some questions related to this situation. I hope that the Commission’s investigation and conclusions will allow us to improve the situation for the petitioners and also to ensure that we can avoid this kind of practice in the future and consequently improve the application of European Union law.

So, Commissioner, on the basis of the petitions, a number of questions should have an answer tonight. Do the petitions relate to the breach of banks’ obligations in relation to the information to be provided to clients under the Markets in Financial Instruments Directive (MiFID) I, as transposed by Spanish law? Has Spain properly transposed MiFID I or have Spanish national authorities properly enforced the applicable provisions?

We are also asking what measures the Commission has taken or will take to address the abuses committed by companies selling financial instruments that affect small depositors and small owners of financial instruments such as preferred shares, which in many cases have been marketed without full compliance with EU legislation.

I would like to know, too, if the Commission is willing to take measures with regard to unfair clauses in Spanish mortgage law, in particular with regard to unfair commercial practices and the incorrect behaviour of the banks that provided all these people with the loans in question.

I am looking forward to your answers, Commissioner Jourová, and also to hearing the views of my colleagues. And let me say, on a personal note, that we should be full of compassion for the people who have suffered terribly, but we should also make sure that future legislation is safe and sound for everyone in Europe.