CJEU on Early Loan Repayment Fees

Nov 15, 2024 Benn-Ibler Rechtsanwälte

The European Court of Justice has recently ruled on a claim for the partial reimbursement of the commission paid in the event of the early repayment of a mortgage loan.

In the case at hand, a consumer had taken out a mortgage for a period of 360 months. At the time of the conclusion of the mortgage agreement, she paid a commission for the granting of the mortgage, which was part of the total cost of the loan. Only 19 months later, the consumer repaid the entire loan. She then asked the bank to reimburse her for the part of the commission corresponding to the remaining term of the agreement, i.e. 34 months.

The Polish court, having doubts about the interpretation of the Consumer Credit Directive, referred the following question to the CJEU for a preliminary ruling: ‘In the event of early repayment of a mortgage loan, is the commission for granting the loan to be partially reimbursed?’

The national court added that the bank had not informed the consumer whether the costs in question were objectively related to the duration of the credit agreement.

The CJEU stated in its ruling that the creditor must provide the consumer with pre-contractual information on the breakdown of the costs into one-off and periodic costs. In the absence of information making it possible to determine whether the costs in question are related to the duration of the contract or not, they must be regarded as related to the duration of the contract and may be subject to a reduction in the event of early repayment.

According to the Court, the consumer should not be disadvantaged by a lack of information which the creditor is obliged to provide. Moreover, the fact that the consumer has paid costs at the conclusion of the contract does not necessarily mean that these costs are independent of the duration of the contract and therefore cannot be partially reimbursed.

CJEU C-76/22 (17.10.2024)