Crisis causes sharp fall in Spanish household investments

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The financial crisis has caused a strong decline in investment from households in Spain and a significant restructuring of portfolio assets, according to Julio Segura, president of the Comisión Nacional del Mercado de Valores (CNMV), Spain’s market regulator.

The move to time deposits was also encouraged by the Spanish banks’ aggressive campaigns offering deposits with high interest rates. As Spain’s banks were locked out to the international capital markets, they grew increasingly dependent on selling more savings products to retail consumers to satisfy their funding requirements.

In a speech on “The defence of household savings in Spain: risks and prospects in times of crisis “, at a conference organized by financial consumer organisation ADICAE, Segura warned that consumers often do not understand products being offered to them by financial institutions.

Complaints from consumers to the CNMV have risen sharply in the past three years and so far this year the regulator has received 35% more complaints than for the whole of 2010.

Consumers and users of financial services should be especially cautious about “aggressive offers for deposits” he said. Products such as preference shares have also been aimed especially at retail customers who may not be familiar with them.

Francisca Sauquillo, president of the Consejo de Consumidores y Usuarios (CCU), a national consumer protection organisation, said at the conference that one of the main problems for savers in Spain is the lack of adequate financial information. European Union rules that regulate the sale of financial products and the provision of information are generally unknown to the general public, she said. More education is needed so that investors can recognise market abuse.