Germany offers easier-to-follow consumer loan contracts


The Federal Ministry of Justice and Consumer Protection (BMJV) bill changes the revocation information model for general consumer loan contracts. The Court of Justice of the European Union (CJEU) recently ruled that the existing practice in Germany violated the Consumer Credit Directive.

Johanna Weißbach, Financial Services Litigation Expert at Pinsent Masons, said: “As expected, the German legislator reacted to the decision of the European Court of Justice, which had ruled that the current model of contract termination information consumer credit was contrary to European law. “

The CJEU ruled that the Consumer Credit Directive requires credit agreements to provide clear and concise information about when people can opt out. Otherwise, the effectiveness of the right of withdrawal would be seriously weakened, according to the CJEU.

The ruling said the Consumer Credit Directive should be interpreted “as preventing a credit agreement from referring to […] to a provision of national law which itself refers to other legislative provisions of the Member State in question ”. The references thus aligned are called “cascading references”.

The CJEU judgment concluded that the model and therefore current German law was incompatible with the Directive, as the legal model of revocation information for general consumer credit contracts in the “Einführungsgesetz zum Bürgerlichen Gesetzbuch” ( German Civil Code / EGBGB introductory law) provides for a cascading referral such as the one contested by the CJEU judgment. The German government now wants to change that and add a full list of mandatory information to the model information.

“A change in the law is necessary to bring national law into line with European law in accordance with the principle of the separation of powers,” said Michèle Heil, civil litigation expert at Pinsent Masons. “Lenders should follow the legislative process closely so that they can react in time with an adjustment to their cancellation policy. If the use of the model is not binding, once the bill has entered into force, the cascading referral will no longer be sufficient. – called “perpetual rights of withdrawal” of the consumer could be the consequence ”.

The CJEU decision came in the context of a dispute between a customer and Kreissparkasse Saarlouis, which prompted the Saarbrücken district court to refer the matter to the CJEU.

In 2012, a consumer entered into a loan agreement with Kreissparkasse Saarlouis. The contract lacked mandatory information that the consumer must receive to trigger the withdrawal period. Instead, the contract only referred to a paragraph of the Bürgerliches Gesetzbuch (German Civil Code, BGB), which itself referred to a section of the EGBGB.

When the consumer exercised his right of withdrawal, Kreissparkasse Saarlouis declared that this was too late. The consumer lodged a complaint with the district court in Saarbrücken.

The district court doubted whether the consumer had been correctly informed of the right of withdrawal. The cascading referral required the consumer to take the information on the start of the deadline from the relevant legal texts, but also to carry out an additional legal examination of the conditions. The district court ruled that this was a violation of the European Consumer Credit Directive, which requires consumer credit contracts to contain in clear and precise terms “deadlines and the like. modalities for exercising the withdrawal ”. The district court therefore requested a preliminary ruling from the CJEU.

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