OGH: New Ruling on Loan Handling Fees

Apr 12, 2024 Benn-Ibler Rechtsanwälte

On 23 January, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) issued its first decision on complaints about handling fees for consumer loans. Its decision is a departure from previous case law.

The Austrian Verein für Konsumenteninformation (Association for Consumer Information) as plaintiff sought to prohibit the defendant bank from using the following clauses in its General Terms and Conditions when dealing with consumers:

‘A one-off handling fee of 4.000% of the loan amount charged to the loan account (clause 1).

Collection fees of €75.00 (clause 2a), transfer fees of €15.00 (clause 2b) and postage and printing costs of €25.00 (clause 2c), which will be deducted from the loan disbursement amount.

Account management fee: €7.00 per quarter (clause 3).’

The action was fully upheld by the court of first instance. The court of appeal upheld the decision with exception of clause 3. In its assessment of the clauses, the OGH stressed the following:

Previously, handling fees were not subject to the review of their content pursuant to Section 879(3) of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB), as they were considered part of the remuneration for the loan and therefore a primary obligation. However, in its decision C-565/21, the ECJ has emphasised that handling fees are always subject to the requirement of transparency.

Lenders are not required to provide detailed information on the nature of all services, but the categories of service must be understandable and distinguishable. Consumers must be able to check whether the various fees overlap.

It is not possible for consumers to understand which costs are covered by the handling fee, as additional fees are charged that are also borne by the borrower (collection and transfer fees, printing and postage costs). As it is not possible to check whether the handling fee overlaps with other fees, the handling fee is not transparent.

Furthermore, it is unclear how often the costs of clauses 2a, 2b and 2c are charged. As the possibility of multiple charges is not ruled out, they are also not transparent.

OGH 2 Ob 238/23y (23 January 2024)