ECJ strengthens consumer rights in credit agreements

The European Court of Justice has strengthened the rights of consumers in credit agreements. The highest court in the EU specified in a ruling on Thursday which information must contain corresponding contracts. It is primarily about the so-called “small print”: The judges demand that clauses are formulated more clearly and are easier to understand.

For example, it must be clear how high interest on arrears is if the borrower falls behind with the installment payments. Since, from the point of view of the judges at the ECJ, many loans do not meet such claims and are therefore illegal, they can be terminated by the borrower – even years after the conclusion.

Specialist lawyers: Many contracts can now be challenged

According to expert lawyers, many contracts can now be challenged – even if consumers want to conclude new contracts with lower interest rates, for example. The ECJ’s decision extends to loans for cars and other consumer goods, but not to real estate.

Christoph Herrmann from Stiftung Warentest believes that the judgment will help many debtors. “Most of them can now revoke their old loan agreements, even if it has been many years since the contract was signed,” he said. This could reduce the remaining debt, for example, which is due, among other things, to the fact that fees or interest on arrears are no longer applicable.

Lawyer: Judgment helps with new loan agreements

The Cologne lawyer Christian Solmecke, who was not involved in the proceedings, said after the judgment that the judgment would be particularly advantageous if customers wanted to conclude a new loan agreement in order to benefit from the current low interest rates. Almost no known loan contract model could withstand the requirements set by the ECJ for individual mandatory information.

The law firm Gansel Rechtsanw├Ąlte, which was involved in the proceedings, announced that almost all private consumer loans were affected by the judgment. “The only exceptions are consumer loans with a mortgage, especially real estate.” This means that there are also many potential new clients for law firms.

The background to the judgment are inadequate car loan agreements

The background to the ECJ ruling is based on several cases that are being heard at the Ravensburg Regional Court. Car loan agreements were revoked long after the deadline had expired. The reason given by consumers was that important information was missing from the contracts. Lenders were the VW, BMW and Skoda banks. BMW announced that in order to assess the effects, it would have to be seen how the procedure would proceed in Germany.

The VW Bank said it was examining the effects. “However, we do not expect that numerous customers will declare their revocation.” Because customers would have to pay for the loss of value of a vehicle in the event of a cancellation, the cancellation does not offer any economic advantage. Christoph Herrmann from Stiftung Warentest, on the other hand, said: “You will, however, get your sales tax and retailer’s margin back in full.”

The reaction of the Federal Court of Justice remains to be seen

According to industry representatives, it is unclear how the decision will affect the banking sector as a whole. It remains to be seen how the Federal Court of Justice will deal with the decision of the European Court of Justice, announced the German banking industry.

With the judgment, the ECJ corrects the “recently often consumer-unfriendly judgments of the Federal Court of Justice (BGH) on banking and capital market law” from the point of view of Stiftung Warentest.

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