A borrower who has previously repaid the liability should recover part of all costs, not just interest or insurance. This ruling was issued by the CJEU on September 11, 2019. This opens the way for bank customers to recover money. Will it be easy though?
The Court of Justice of the European Union (CJEU) has a lot of work recently in relation to the Polish banking sector. Soon he will issue a verdict regarding Polish franchisees, and recently, on September 11, he spoke on another very important matter.
Banks and debt purchase companies. It was a case with reference number C-383/18, which concerned a dispute, which costs must be reimbursed upon early repayment of the loan. The CJEU stood firmly on the side of borrowers.
However, it seems that banks or loan companies will not lay down their arms so easily. Is the CJEU judgment the end of the battle for reimbursement of credit costs? Not necessarily.
The bank will probably defend its position to avoid losses. However, in order to clarify the essence of the dispute, the verdict and its significance for the Polish consumer, one needs to go back to the beginning of Case C-383/18.
On 11 June 2018, the CJEU received an application for issue, pursuant to art. 267 TFEU for a preliminary ruling, submitted by the Lublin-Wschód District Court in Lublin with headquarters in Świdnik. Consumers have transferred claims under three loan agreements to Lexitor and made early repayments. The law firm demanded that banks pay back part of the commission with interest. That’s when the dispute arose.
The bank rejected Lexitor’s claim, claiming that the commission is not refundable. As a result, the case was heard by the Lublin-Wschód District Court based in Świdnik.
Unfortunately, the judge had doubts about how to understand art. 16 clause 1 of the Consumer Credit Directive (2008/48 / EC). The problem was whether the article concerned only costs related to the duration of the contract or all costs. Hence the request to the CJEU.
Doubts about the interpretation of art. 16 clause 1 of the Consumer Credit Directive (2008/48 / EC) concerned at the same time doubts as to art. 49 of the Consumer Credit Act, which was based on European legislation. It was only the judgment of the CJEU that gave a clear interpretation of how these articles should be interpreted.
In a judgment issued on 11 September, the Court of Justice of the European Union categorically stated that every consumer has the right to reduce the total cost of credit in the event of its early repayment. At the same time, it is a proportional reimbursement of all costs imposed on the borrower.
The Polish court had doubts whether limiting the reduction in the total cost of credit only to costs that are related to the repayment period of the liability will not cause that in the future banks will impose higher one-off fees on clients when signing loan agreements.
The CJEU shared this concern and emphasized that banks could in the future reduce costs depending on the duration of the agreement in favor of one-off fees. You can imagine, for example, a loan with a nominal interest rate of 0%, but with a very high commission, which will constitute the bank’s earnings.