GER: Custodial Fee Clauses Effective – Consumer Advocates Fail

Nov 17, 2023 Benn-Ibler Rechtsanwälte

A German consumer advocacy organisation was recently defeated in court by a commercial bank. The penalty interest clauses in the bank’s pre-formulated GTCs for customers with savings deposits are neither non-transparent nor surprising, a German court says.

The defendant bank offers contracts with consumers for the safekeeping of their savings deposits. In the period from mid-2020 to mid-2022, new customers had to pay a custodial fee for deposits above EUR 250 000, and existing customers had to pay such a fee upon agreement. When entering into a business relationship with new customers, the defendant bank used a form which, in Item 15, contained a ‘framework agreement for the safekeeping of deposits’. A deposit fee of 0.5% p.a. above EUR 250,000 was set.

The court of first instance ruled in favour of the consumer organisation. It held that clauses providing for custodial fees on savings deposits discriminated unfairly against customers. The defendant bank’s appeal against this decision was successful before the Frankfurt Higher Regional Court which considered the clause to be a so-called key price agreement which directly determines the price of a key service and which is covered by the freedom of contract between banks and their customers, and therefore is not subject to a content review for GTCs. Safekeeping and return of one and the same amount of money is regulated as a unilateral contractual key performance obligation of a bank within the scope of savings contracts. Thus, banks can unilaterally determine the price of this service. Contrary to the opinion of the regional court, no loan agreement exists, as customers are not contractually obliged to pay a specific amount of money into the account.

In addition, the court pointed out that the clause in question would not be invalid even after a content review. The clause is not unfair because the savings agreement only requires the bank unilaterally to deposit and return the funds. Unlike a loan, savers are not obliged to transfer funds to the bank by paying interest.

The decision is not yet legally binding.

Press release no. 60/2023 of the Oberlandesgericht Frankfurt a.M. (Higher Regional Court) concerning Judgment 3 U 286/22 (5 October 2023)