Driving Licences & the Guardia

The note below is my experience only about Driving Licences and their use in Spain.
On the February 4th 2012 I was stopped for what I thought was a routine road side check. I gave the officer the vehicle documents; he also asked if I was a resident of Spain which I am. He then asked to check my driving licence (which is a UK issued licence with the European logo and has three years left to run). He checked all documents while sitting in his vehicle, which he must have checked with Trafico Malaga. When he returned all documents to me he also gave me a Denuncía which he asked me sign, I did not sign it as I did not understand what I was signing for. I have since found out since that the Denuncía stated that I did not have a Medical certificate registered with Trafico Malaga. He did not have any problems with any of car documents or my UK driving licence, only the fact that I did not have the medical. I asked him to explain and all he said was that I had to have a medical for driving in Spain.
Following this Elaine and I went to one of the authorised Trafico medical centres in our area for a medical check to be carried out. (Trafico have a website which they list a number of authorised medical centres in our area who can carry out their medical checks and send these directly to Trafico via the internet) We had the medical checks carried out whereby the details of our driving licences and other information were recorded and photos taken. She insisted it had to be carried out by 2.00pm so it would be uploaded through to Trafico. The medical certificate had a large green tick at the bottom indicating that all was well and it was uploaded.
There has been much said recently on this matter and I think much confusing information given out. I decided to make a visit to Trafico in Malaga to clarify the situation and discuss the Denuncía. When we arrived we went through the system to get to one of the counters. I asked if I needed to get the medical certificate recorded and registered with Trafico. The assistant looked at the Denuncía and the medical certificate and then went off to check with his colleagues. His reply was that it was not necessary even to have the medical completed as I was using a UK driving licence. I asked if I needed to change to a Spanish driving licence and was told that as my licence had three more years to run it was not necessary until the UK licence was due to run out. I could then change to Spanish licence. If I wanted to have Spanish licence now it would be purely voluntary.
I was then told that the Guardia Officer was incorrect in issuing the Denuncía. What he stated was not correct according to Spanish law and it was perfectly correct for me to be driving in Spain on a valid UK (i.e. European) licence. The counter assistant stated they would pass this information on within Trafico and get corrected information sent out to the Guardia Civil officers giving them the correct understanding of the law. I was given a form to complete in Spanish, quoting the Denuncía details, number and other bits of information and to resubmit the form to have the Denuncía cancelled. This form also needed a photocopy of my driving licence, front and back. I have done this
and the form was received by Trafico and stamped and receipted last week.
I have a neighbour who has a UK driving licence and has been for a medical check at Clinica Rincon and has also been to Trafico to get her medical certificate registered. She was told the same as I was that the medical was not required and it was not a requirement of Spanish law. She was also told that we are all European and therefore a UK driving licence is totally acceptable whilst driving in Spain. She was also told to go back to Clinica Rincon and ask for her money back. Therefore with her information separately obtained and from a different counter at Trafico and on different day to the one I used, it has totally agreed with my understanding of the driving requirements as above. Again I must state this is only my experience of what has happened and is my understanding from my recent visits to Trafico. If you have any enquires please contact Trafico directly yourselves to clarify your personal situation.
ADDENDUM
I received a letter with a fine €200 for the offence last week and went to Trafico last Friday 20th April (this crossed over with our claim submitted on the 26th March). We are now told that all persons with Spanish Residency and using a UK licence have to have thier licences registered with Trafico. They charge €8 to do this and you need to fill in a form and supply various copies with originals to prove of residencia, passport, NIE and licence. They then contact the DVLA and will ask you to come back to Trafico to complete the process.