Austrian OGH Bans Unlawful Loan Fee Clauses

Apr 11, 2025 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has ruled several of a bank’s fee clauses invalid, including handling, reminder, and account management fees.

In the case at hand, a consumer protection organisation, an association with class action status under Section 29(1) of the Austrian Consumer Protection Act (Konsumentenschutzgesetz, hereinafter KSchG), sought an injunction against these clauses on the grounds that they were unfairly prejudicial to consumers and breached the requirement of transparency. The court of first instance partially upheld the claim, while the court of appeal prohibited all of the challenged clauses and ordered the bank to publish the court ruling.

The bank appealed, arguing that certain fees were objectively justified. In particular, the bank pointed out that loan processing fees are customary in banking and that penalty fees are necessary to cover internal costs. The bank also requested that the prohibition be limited to newer contracts.

The OGH dismissed the bank’s appeal and upheld the decision of the court of appeal. A total of seven clauses were examined for their legal admissibility. The decisive factor was that the clauses either violated the requirement of transparency or grossly disadvantaged consumers. The loan handling fees lacked sufficient detail and therefore failed to provide transparency. Flat-rate reminder fees did not take into account actual costs and violate Section 1333(2) of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB). The account management fees were unclear, not meeting the requirements of Section 6(3) of the KSchG. In addition, the fees charged for issuing a cancellation receipt violates the statutory provision that creditors must bear the costs. Neither the court of appeal nor the OGH shared the view of the court of first instance that the agreed fee for issuing such a receipt was not grossly unfair.

The bank may not invoke these clauses in the future and must publish the court ruling.

OGH 7 Ob 169/24i (19 February 2025)