OGH on Repayment of Loan Processing Fees

Jun 16, 2023 Benn-Ibler Rechtsanwälte

According to the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH), the clause used by a credit institution to exclude the repayment of processing fees in the event of early repayment of a loan is neither unlawful nor grossly disadvantageous.

The complaint was brought by an association for consumer interests against a credit institution. The institution, as an entrepreneur, used contract forms for its mortgage-backed loan agreements, which included a clause concerning early repayment which governs the borrower’s right to early repayment of the loan as well as the reduction of interest to be paid by the borrower in this case, as well as term-independent costs. It also contains the statement: ‘It is expressly stated that term-independent processing fees will not be reimbursed, not even on a pro rata basis.’

The plaintiffs sought an order requiring the credit institution to refrain from using this clause. The plaintiffs argued that the clause contradicted Article 25(1) of the Consumer Credit Contracts Directive, according to which consumers have the right to a reduction of the total costs in the event of early repayment. Furthermore, they based their argumentation on a ruling by the European Court of Justice in the Lexitor case, in which it had been decided that both term-related and independent costs must be lowered. In the plaintiffs’ view, this case law on the Consumer Credit Contracts Directive should also apply to mortgage and real estate loans. The contested clause was thus unlawful and grossly disadvantageous, they argued.

The OGH ruled as follows:

The clause is not contrary to EU law. The decision in the Lexitor case was made exclusively on the interpretation of the Consumer Credit Contracts Directive and cannot be used for the interpretation of mortgage and real estate loans. After obtaining the preliminary ruling of the ECJ, Article 25(1) of the Consumer Credit Directive is to be interpreted as not precluding national legislation which provides that the consumer’s right to a reduction of the total cost of the credit in the event of early repayment of the credit includes only the interest and the term-related costs. The mortgage credit cannot include costs which, irrespective of the duration of the contract, are imposed on the consumer, either for the benefit of the creditor or for the benefit of third parties, for services which have already been provided in full at the time of early repayment.

OGH, 5 Ob 25/23x (18.04.2023)