GER: Charges for Early Loan Repayment

Dec 8, 2023 Benn-Ibler Rechtsanwälte

According to the Higher Regional Court of Frankfurt am Main, so-called flat-rate bank charges in connection with early loan repayments can only be applied if consumers are given the opportunity to show that the bank has suffered lower or no damages.

The plaintiff in the case at hand is suing the defendant bank for charging him a flat-rate fee of EUR 300. When calculating the early repayment penalty for the early repayment of a consumer loan, the bank had additionally charged him a flat-rate fee.

The plaintiff had already argued before a regional court in 2017 that the defendant bank should not be allowed to charge a flat ‘administrative fee’ of EUR 300 in case of early loan repayment, as stated in the bank’s list of services.

Then, however, his case had been dismissed. The action was now successfully appealed and overturned by the Frankfurt am Main Higher Regional Court.

The bank’s software automatically charges customers an ‘administrative fee’ as part of their loan charges. This is tantamount to an internal instruction given by the bank. According to the Higher Regional Court, this makes it part of the G&Ts and therefore subject to content review.

Section 309 No. 5b of the German Civil Code (Bürgerliches Gesetzbuch) reads as follows:

Even if a deviation from statutory provisions is permitted, an agreement in the General Terms and Conditions on a flat-rate claim for damages or compensation for a reduction in value is invalid if the other party to the contract is not expressly permitted to prove that no damage or reduction in value has occurred or that this is significantly lower than the flat-rate fee.

In the case at hand, therefore, the bank charges would not pass a content review of the G&T clauses.

This is because the user of the clause obtains a lump-sum claim for damages without the other party to the contract, in this case the bank customer, being able to prove that the actual damage was less or even non-existent.

Press release no. 61/2023, OLG Frankfurt am Main 17 U 214/22 (4 October 2023)