ECJ: Banks May Lose Right to Costs for Bad Customer Information

Mar 7, 2025 Benn-Ibler Rechtsanwälte

The European Court of Justice (ECJ) has ruled that banks can lose their right to contractually agreed interest and costs if they fail to meet their information obligations in consumer credit agreements.

In the case at hand, a Polish consumer had assigned his rights under a loan agreement to a debt collection agency. The agency sued the bank, claiming that the bank had applied an excessive APR and used unclear clauses to increase its fees. Consequently, the Polish court asked the ECJ whether such a breach of contract could result in the complete loss of a bank’s right to interest.

The ECJ decided as follows:

The APR must be clearly indicated at the time the contract is concluded. However, a subsequent finding that specific contract terms are unfair does not automatically breach the information requirement.

Secondly, the conditions for changing fees associated with performing the contract must be clearly and unambiguously described in the agreement. Unclear references to difficult-to-verify items may indeed constitute a breach of information requirements.

Failure to comply may result in the bank losing its right to interest, especially if the consumer could not assess their obligations.

The ECJ considers that, although the specific gravity of the breach and the consequences for the consumer may vary in individual cases, this sanction is in principle proportionate. Whether the bank has breached its information obligations is now a matter for the national court.

ECJ C-472/23 (13 February 2025)