Editor’s note: This article was first published in January 2011, during Spain’s economic crisis. The €50 fee for chasing a missed loan instalment, councils taking more than eight months to pay suppliers and roadworks doubling fine revenue describe that period; Spanish rules on these matters have changed since.
The big eat the small as long as the small let them. Large companies, town councils and even governments, in their eagerness to raise money, are constantly committing abuses. Among the most frequent and blatant are those of the banking sector, which we’ve accepted to such a degree that it gets the fewest complaints and hardly any lawsuits, because we take it for granted that banks are allowed to do it. In short, we consent to it.
Banks, finance companies and lenders
We’ll start with the simplest cases and work up to the more complex ones.
When someone with a personal loan pays the instalments regularly and then, at some point in their working life, runs into a problem or simply forgets to pay one instalment, the fee for chasing that payment can be as much as €50. And that’s just the claim fee, because daily late-payment interest starts from there.
That means that if someone has trouble paying €100 because of a simple unexpected expense, they have to come up with €150 plus late interest. So if they struggle to find the money and their financial situation drags on, they can end up owing €700 in less than six months, on top of constant pressure from the lender, seizure proceedings and so on.
Complaining about this kind of abuse is unthinkable because, among other things, you signed that they can do it on one of those four pages of small print nobody reads.
But now I ask: who on earth is a bank to charge these abusive interest rates that no other company could charge in a similar situation? Why do consumer protection organisations let banks get away with this abuse? And, more importantly, why don’t we tell the bank to get lost?
The answer is simple: because we all let them, and nobody has filed a class action against them, partly because such a case would easily be lost, given that the government backs their abusive system.
If any company receives a promissory note and, on the due date, there are no funds to cover it, the company’s customer reaches an agreement with it, and once the company receives the late payment the following month, it is illegal for that company to charge late-payment interest. Yet the bank has already charged interest for the returned note.
However you look at it, the bank abuses. It plays on the edge of “illegality”, but its abuse is perfectly legal as long as nobody rebels against its system, something we already assume would be madness, because it’s a bank, and banks are highly protected by the country’s laws.
The same goes for finance companies and lenders: if you miss a payment, three days later you get a threatening letter informing you that they will seize your assets if you don’t sort out the situation.
If you got that letter from the usual shop where you buy your children’s Three Kings’ Day presents (6 January, Spain’s traditional gift-giving day), you’d simply pay the instalment and tell the owner they’d never see you in there again. But with a finance company, people tend to apologise, taking it for granted that it’s allowed to speak to you in that threatening tone.
Banks also run outright scams. That’s when the branch manager convinces the typical person with some savings and no experience of finance or investing to put money into one of the bank’s “trap” investment funds, the ones the bank knows in advance won’t make money, only losses.
Of course, the bank warns you (in the small print) about the risks of investing, but throughout the conversation they give you a misleading sales pitch about the returns of their funds, when in reality those funds have never been profitable. You can’t report that either, because you signed it, but it borders on illegality. What’s more, under the law it shouldn’t be allowed to take advantage of someone who isn’t in full possession of their faculties, and in this case very few people are “in full possession of their faculties in financial terms”.
Town councils
At a time when roadworks are driving thousands of shops in every city into bankruptcy, with signs changing daily and obstacles for drivers who don’t know the area, people don’t complain about the situation, yet the council won’t back down on fines handed out for mistakes caused by poor signage and sudden sign changes.
We assume that because it’s a fine, we have to pay it, but we don’t question why the offence happened, when it may well have been a moment of confusion caused by the council itself.
The fact is that since councils turned city centres into a mess of roadworks, they’ve managed to double their revenue in the way they know best: fines.
Councils are ruining the small and medium-sized businesses that supply them with products and services. In some cases they take more than eight months to pay, while the supplier has already paid the VAT on an invoice it issued but still hasn’t been paid for.
Shouldn’t that supplier have the same right to charge late-payment interest like the interest a bank charges? Why does the government allow a bank to charge it, while a small business has to put up with non-payment by a “public body”, and meanwhile the bank is already charging that business interest for failing to meet debts caused by the council not paying?
Government
A driver doing 150 km/h on a motorway is called a “kamikaze”, and nowadays going over that speed is considered a “very serious” offence, for which you can lose your vehicle, which will then join the government’s fleet or simply be auctioned off. See: car confiscation, the government’s new business.
But drivers don’t file complaints about the state of the roads, the main cause of accidents in Spain, since it has been shown that in Germany, with no speed limits, there are no road accidents to speak of, because, among other reasons, the roads are in good condition.
Revenue-raising zeal
We pay road tax, the windscreen sticker and so on. What for? So that we can’t park outside our own homes because they’ve painted a blue line, a red line, a yellow line or a multicoloured one. Either you pay for a car park or you pay for street parking, for something as basic as parking a vehicle that regularly pays its taxes.
In the old days, when a double-parked car blocked yours in, you’d call the tow truck and, with a bit of luck, it would arrive within two hours. Nowadays you don’t have to call the tow truck; it turns up on its own, and if you’re not careful, they’ll tow your own car away from your own garage entrance. (I say this because it happened to me, and I had to pay the fine even though my own car wasn’t in my way at my own garage door.)
Income tax returns
The tax agency (Hacienda) has pocketed millions of euros (I don’t know how many, since they don’t release figures) through income tax returns in an entirely “illegal” way. As the crisis has gone on, they’ve mysteriously made more and more mistakes in refunds and, even more mysteriously and by sheer coincidence, always in their favour. If you accept the draft return they send you, you may lose money that’s yours. If you go through it with your tax adviser, in a high percentage of cases you’ll find they’ve made a mistake and aren’t going to pay you everything you’re owed.
Of course, once you’ve checked, you claim what you’re owed and, after a few months’ wait, you may get paid, but they don’t pay you any late-payment interest for the time they’ve held on to your money. But the bank does charge you that interest.
This is the situation we live with every day. Everyone wants to rip you off, and yet the one they portray as the swindler is whoever evades taxes, making us believe that “we are all the tax office” (an old Spanish tax-campaign slogan). Well, if we are all the tax office, we’re all heading down the wrong path.
But of everything I’ve mentioned, number one for usury is the banking industry, and I only hope that one day the banks pay for everything they’ve stolen, because what they do, let’s not kid ourselves, is steal. One day people with the power to put certain banks where they belong will come together: buried in complaint forms and keeping their lawyers busy with thousands of open cases against “usurers” and thieves who got rich from the misfortunes of those most in need.
I hope I live long enough to see that day, because I don’t know how much longer the banks expect citizens to keep quiet. In the end, rubbish starts to smell, and when the smell wakes people up, that’s when they look for solutions.
Featured image: Santeri Viinamäki, CC BY-SA 4.0, via Wikimedia Commons.
