"Historical verdict": EU court declares millions of credit agreements illegal

Translated via Google Translate

Do clauses in a credit agreement have to be clearly understandable to consumers? The Federal Court of Justice had nothing wrong with the practice of German banks. But the highest European court now contradicts and declares millions of credit agreements illegal. The consequences are potentially gigantic.

The European Court of Justice has strengthened the rights of consumers in credit agreements. The highest court in the EU specified in a judgment on Thursday which information must contain corresponding contracts.

According to historical judgment: "Most of them can now revoke"

This includes, for example, exact percentages of interest on arrears, as shown by the verdict. The calculation method of compensation due in the event of early repayment must therefore also be stated in an "easily comprehensible manner" for an average consumer (Cases C-33/20, C-155/20 and C-187/20). In other words, if the clauses in a contract are not formulated clearly and comprehensibly, the consumer can revoke the contract. In this case, consumers no longer have to repay their remaining debts and are even entitled to repayment of their deposit and all monthly installments already paid.

According to Christoph Herrmann from Stiftung Warentest, the verdict helps many debtors. Most of them can now revoke their old credit agreements, even if many years have passed since the conclusion of the contract, he said. Gansel Rechtsanwälte, which was involved in the proceedings, said that almost all private consumer loans are affected by the judgment. Only consumer loans with real estate liens, i.e. especially real estate, are excluded.

EU court declares millions of credit agreements illegal - "Historical victory of consumer protection"

The law firm Lehnen & Sinnig, which specializes in credit agreements, assumes that car loan agreements will be particularly affected by the decision. The proceedings before the ECJ concern car loan agreements of Volkswagen Bank and BMW Bank, said lawyer Christoph Lehnen. However, we know from our daily work: The errors reprimanded by the ECJ can be found in all consumer credit agreements of all banks operating in Germany since 2010. It is hardly conceivable to have a credit agreement that is not revocable."

The verdict is a "historical victory in favor of consumer protection and a slap in the face of the Federal Supreme Court," Lehnen continues. As much as we are pleased with the victory before the ECJ, we are still shocked by the decision-making practice of the Federal Court of Justice contrary to European law in recent months and its persistent refusal to bring about a supreme court decision of the ECJ. You could almost think that the judges at the Federal Court of Justice didn't want to know better. The BGH received the receipt for its banking-friendly judicial practice with today's judgment from Luxembourg.

The background to the ECJ ruling is several cases that are being heard at the Ravensburg district court. Car loan agreements were revoked long after the deadline had expired. This was justified by consumers on the grounds that important information was missing from the contracts.