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EU Commissioner Vera Jourová calls for French leaseback investigation

Update 16 June 2017

For details on how to submit your complaint to the CCPC see this post.

 

The EU Commissioner for Consumer protection, Vera Jourová, has called for the relevant national authorities to investigate complaints made to her office on cases alleging the mis-selling of French leaseback properties.

She has responded to Vicky Ford’s intervention on behalf of owners and said that:

The European Commission currently has no enforcement powers in cases where traders have acted against national rules stemming from EU Consumer law.

She advises that Vicky Ford contact the UK Competition and Market Authority, CMA:

I would therefore advise that you contact the UK Competition and Market Authority, which in cooperation with your constituents and other victims of the mis-selling, would be best placed to establish which rules are applicable to the present case.

Brian Hayes MEP has already been in contact with the Irish equivalent, CCPC (Competition and Consumer Protection Commission). They have made an initial response.

She notes that Veronica Manfredi, Head of unit responsible for EU consumer and marketing law has already met with Brian Hayes and 3 owners. She mentions that the Unfair Commercial Practices Directive 2005/29/EC, may not have been transposed into national law at the time of the mis-selling.

It seems that this EU directive was transposed into Irish law on 1 May 2007, by the Consumer Protection Act 2007. See more on this from Mason Hayes Curran. It was required to have been transposed to all member states national laws by June 2007.

She makes no explicit mention of the Unfair Terms in Consumer Contracts Directive. Directive 93/13/EEC on Unfair Terms in Consumer Contracts (the UCTD) protects consumers against unfair contract terms. Under Article 6 of this Directive, member states shall lay down that unfair terms in a consumer contract shall not be binding on the consumer. This, I believe, is fundamentally applicable to the leases and subsequent lease amendments agreeing to reduced rent.

Ms Jourová also indicates that there may be national financial regulation rules to be taken account of also if the properties were advertised as investments. In most cases they were advertised as both a lifestyle product and a financial investment. Hundreds of consumers intended to use them as a kind of pension. It is for this reason that the petition calls for the Irish Central Bank to investigate also. They have taken no role thus far. Their response was that the Irish Central Bank has no role in the regulation of property investments. Jourová calls on the national consumer authorities to investigate this aspect of the alleged mis-selling also.

The French consumer authority, DGCCRF (Direction générale de la concurrence, de la consommation et de la répression des fraudes), has been contacted by the European Commission. Ms Marie-Paule Benassi, Head of unit responsible for consumer enforcement and redress has communicated with them. The DGCCRF is looking into the matter but would need more precise information about the operators involved in the leaseback schemes.

Conclusion

Ms Jourová suggests that:

The UK Competition and Market Authority and the Irish Competition and Consumer Protection Authority share with the French DGCCRF all relevant information. DG Justice and Consumers is available to assist the co-ordination and to bring this issue also to the attention of the enforcement authorities of other Member States whose citizens may also be affected.

What should French leaseback owners do now?

The logical next step would be for all owners who believe they were mis-sold to submit the details of their case to their relevant consumer body. An initial submission might include a brief summary of the purchase with dates and what happened subsequently. Include all pertinent details from the marketing and the lease, stating the ‘guaranteed’ rent and the lack of information regarding the lease going on forever. Highlight the aspects of the sale that were mis-leading. For example, if you had known that the guaranteed rent was not in fact guaranteed in any way whatsoever, and in fact frequently was not paid at all, or if you had known that the lease went on forever, you would not have made the purchase and would not have signed such a lease contract.

Include the following (or supply at a later stage):

  1. your name, address and contact details
  2. any advertising, marketing material, newspaper articles, websites etc which initially prompted the decision to purchase the property
  3. any material from the selling agent, either in Ireland or in France
  4. any material you received from the intermediary/agent/developer in France, who assisted in the arranging of the purchase
  5. any material you received from the intermediary/agent in France in relation to financing the property
  6. any contract documentation you received on purchasing the property and the full name of the trader (development company)
  7. any contract documentation you received when you arranged the lease back and the full name and details for the trader (developer/sister management company)
  8. the new lease documentation and the full name of the trader (where a second or lease amendment was signed)

In my view it is important that the relevant consumer body are aware of all owners who believe there was mis-selling and unfair contract terms in their purchase of a French leaseback.

While there are many groups of owners within the same development there are many of these and with multiple operators. There were also multiple sales agents, notaires and banks involved.

Include a reference to the EU Commissioner for Consumer protection, Vera Jourová, and say she that after being contacted by Vicky Ford MEP, she has called for the relevant national authorities to investigate complaints made to her office on cases alleging the mis-selling of French leaseback properties.

Irish Owners – Make a Complaint to CCPC (Competition and Consumer Protection Commission)

The CCPC have requested that Irish citizens make their complaints to info@ccpc.ie.

In this way the complaint will be logged correctly.

The Consumer Helpline is available at lo-call 1890 432 432 or 01 402 5555 (opening hours are from 9:00 to 18:00 Monday to Friday)

and the postal address is:

Post: Bloom House, PO Box 12585, Railway Street, Dublin 1

For more detail go to their website.

 

UK Owners – Notify the CMA (Competition and Market Authority)

You can submit the details of the mis-selling you have experienced to the UK consumer authority by contacting them below:

They have a notification form you can use or you can email them directly at :

Email: general.enquiries@cma.gsi.gov.uk

For more detail go to their website.

 

Owners from other EU Member States

Identify your national consumer authority and submit your case to them. Include the above.

 

8 thoughts on “EU Commissioner Vera Jourová calls for French leaseback investigation

  1. My story is similar to I now know thousands of others in Ireland, UK and even France.
    I felt I needed to buy an investment property so that I could sell it in the future so as to give money to both my kids if they ever were to put a deposit on a property in the future as house/apartment prices were climbing steadily.
    So after some consideration I decided that we would invest in a French lease-back;  because it was backed by the French Government, and they were guaranteeing its rental income, and that after twenty years that the mortgage would be paid by the rental income and that the VAT owed to the French Government would be forgone as we had rented out the property for twenty years in an area in which they wanted to promote tourism.
    Well my experience was vastly different.
    For the first two years everything was great; not only was the property being rented out as advertised and therefor the mortgage being paid, but there was also money in excess being paid into a French Bank account set up by us.
    Then came the problem. The company renting out the property said they could no longer pay the levels of rents they had initially guaranteed and that they would have to reduce the rents substantially. I initially thought that we should accept this and just take the reduced rent; however a lot of the apartments were owned by French nationals and they said they would set up their own company to rent. A number of us Irish, many U.K. and all of the French owners went with the new company.
    The rent we received from the new company was very sporadic, and then we found out that the original rental company (who still rented out about half the units in the complex) were approaching the people who had rented from the new company and said that they would rent them a similar property in the same complex for half the price. The original rental company were large operators who rented out many other properties in France, Spain and Switzerland and were essentially below cost selling in our complex in order to gain the market share and financially bust the new company.
    Within a period of about six to nine months, the money which had been deposited in our French bank account as profit after the mortgage had been paid; was now exhausted and our account empty. We (my wife and I) then decided to use about €7k of our own savings in our credit union account to pay the mortgage deficit over the next six or seven months. When we seen that this was a situation that would eat all our savings we decided not to continue to throw away our hard earned savings, so we stopped emptying our savings account.
    We then investigated if we could sell the property , but we could not.
    We then wrote to our French mortgage company and asked them to converse with us in English due to the complexity of financial matters, and also we offered to pay interest only on the mortgage for the next few years , until the rental property company started performing again; but the French mortgage company ignored both of these requests.
    After a number of months I gave up on trying to google translate all of the letters from the French mortgage company and instead stopped opening them and got on with my life. My life was busy then, as my mother died, I went back to college to study full time while also working full time on shift work . When I finished college, my wife then went back to earn her level 8, and then my son started college and he has now just successfully finished third year. So you see my wife and I have worked hard, and made many financial sacrifices to get our achievements for our family, added to which we took huge pay cuts during the financial crisis that have as yet never been returned to us; and as a consequence we did not have one spare euro to give any French bank.
    Thank you,
    Pat,.

    1. Submit your case to the CCPC Pat. As another ‘victim’ I totally empathise with your experience. I have submitted an outline of my experience, both to Brian Hayes and the CCPC. I think it is hugely important that ALL of us do so in order to have credibility and traction in this matter. If we want change, we need to take cohesive, affirmative action. Regards, Gillian.

  2. The French leaseback is the scam to top all scams!

    I personally have been lucky to receive the rent that I had originally for most of the lease apart from when the operator went into Sauvegaurde.

    However, I have discovered that the English version of the lease (for a fully furnished apartment which is what I paid for) which I discussed and approved with the agent is not the same as the French version of the lease which was never translated and we stupidly never questioned and signed is for an unfurnished property. Obviously the agent is long gone into the sunset and the notaire, operator and developer are not responding most probably because they are getting sued elsewhere.

    I have also been funding this so called investment on the basis that I could not renew the lease at the end of next year and take back the property and sell without a lease as it is more valuable in that format. It is now clear that this is very unlikely to be possible unless I pay some eviction indemnity and I am yet to receive a figure for this.

    I’m really hoping that Pat and his solicitors get it right up them as what these crooks have been allowed to get alway with has destroyed many lives. I’ve lost enough sleep over how much I have thrown away at this in terms of deposit and paying the mortgage which I will never see again and I am very lucky in comparison to many. The banks claim to be losers too but they are at the heart of it due to criminal lending practices and no due diligence carried out prior to loaning on majorly overpriced properties.

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