GER: BGH: No Annual Fee for Building Savings Contracts in Accrual Phase

Dec 9, 2022 Benn-Ibler Rechtsanwälte

Annual fees in the accrual phase of current building savings contracts (the German financial product is called Bausparvertrag) are illegal. This was the decision of the Senate of the German Federal Supreme Court (Bundesgerichtshof, hereinafter BGH) responsible, among other things, for banking and stock exchange laws. The fact that a fee is charged when such a contract is concluded is sufficient, according to the court.

The plaintiff, the German Federation of Consumer Organisations, sued a building association. In its General Terms and Conditions for building savings contracts, the latter used, among other things, the following clause: ‘During the accrual phase, the building association shall charge an annual fee of EUR 12 p.a. for each account held by the saver at the beginning of each year, and pro rata in the case of non-complete calendar years.’ The German Federation of Consumer Organisations believed the clause to be invalid as this clause would unreasonably disadvantage savers. Therefore, the German Federation of Consumer Organisations filed an action to prohibit the use of this clause or similar clauses vis-à-vis consumers in building savings contracts.

The German BGH ruled that the annual fee clause does not stand up to scrutiny of content and unreasonably disadvantages the savings customers, contrary to good faith.

The annual fee charged in the savings phase is neither a counter-performance for a contractual principal service nor a fee for a special service and, therefore, is not subject to a fairness test. Rather, the annual fee is used to charge for the administrative services provided by the credit institution during the accrual phase, which, among other things, deals with the administration of the building association savings. These are merely necessary preliminary services, but not principal services owed by the bank in the accrual phase. A review of the clause is therefore permissible. The clause does not stand up to a content review.

According to the judges, charging an annual fee in the accrual phase is incompatible with the fundamental ideas of the pertinent statutory regulation. Savers are unreasonably disadvantaged contrary to the requirements of good faith. Annual fees would merely pass on the costs of administrative activities to the savers. These costs must be borne by building associations on the basis of their statutory obligation to do so.

However, the BGH also ruled that charging a closing fee by the credit institution was permissible.

Press release no. 165/2022 on BGH, XI ZR 551/21 (15 November 2022)