The European Court of Justice has ruled in a preliminary ruling that a borrower must be informed clearly and concisely about the withdrawal period and the other modalities for exercising the right of withdrawal and that a mere reference to legal provisions is not sufficient.
What was the ECJ ruling on the cancellation policy about?
The plaintiff, as a consumer, had concluded a loan agreement secured by a mortgage with Kreissparkasse Saarlouis in 2012. § Section 14 of the loan agreement contained the following provisions on the right of cancellation:
The borrower may cancel his contractual declaration within 14 days without stating reasons in text form (e.g. letter, fax, e-mail).-e-mail). The period begins after the conclusion of the contract, but only after the borrower has received all mandatory information according to § 492 para. 2 BGB (e.g. information on the type of loan, information on the net loan amount, information on the contract term). ..."
At the end of January 2016, the plaintiff revoked his contractual declaration on the loan agreement. The Kreissparkasse Saarlouis took the view that the revocation period had already expired when the plaintiff declared his revocation.
The plaintiff sought the reversal of the loan agreement before the Saarbrücken Regional Court.
In the course of the proceedings, the Regional Court of Saarbrücken was confronted with the questions of whether the proper instruction of the borrower about his right of cancellation and its modalities also included an instruction about the beginning of the cancellation period and whether it was sufficient for the proper instruction of the borrower about the beginning of the cancellation period to refer to Section 492 (2) BGB. Against this background, the Saarbrücken Regional Court directed its request for a preliminary ruling to the European Court of Justice.
What did the ECJ decide?
In addition to admissibility aspects, the European Court of Justice ruled on two of three questions referred by the Regional Court of Saarbrücken, namely the content of the information on revocation and the admissibility of a reference to Section 492 (2) of the German Civil Code (Bürgerliches Gesetzbuch - BGB) on the information on the beginning of the revocation period.
How must I be informed about the beginning of the withdrawal period?
According to the European Court of Justice, a loan agreement must state in a clear and concise manner the information necessary for the calculation of the withdrawal period. This follows from Art. 10(2) of Directive 2008/48 in conjunction with its 31st recital. Given the importance of the right of withdrawal for consumer protection, the consumer must know in advance the conditions, time-limits and modalities for exercising the right of withdrawal(see judgment of 23 January 2019, Walbusch Walter Busch, C-430/17,EU:C:2019:47, paragraph 46).
A reference to legal provisions is not sufficient in the revocation instruction
According to the European Court of Justice, the lender does not fulfil its information obligations regarding the start of the withdrawal obligation by merely stating a legal provision. Rather, the borrower must be informed clearly and concisely about the withdrawal period and the other modalities for exercising the right of withdrawal.
According to Art. 14(1) sentence 2 lit. b of Directive 2008/48, the withdrawal period does not start to run until the consumer has been provided with the information pursuant to Art. 10 of that Directive.
In the present case, the mandatory information was not included in the loan agreement. Rather, the borrower would have to deal intensively with the specified legal provision and check whether the requirements were met. In the present case, this examination (which is already unreasonable for the borrower) is made more difficult by the fact that § 492 (2) BGB refers to further German legal provisions. The borrower is therefore dealing with a "cascade reference"! This does not meet the requirements for clear and concise information.
To which consumer credit agreements does the ECJ ruling apply?
In short: For all types of consumer credit agreements!
The European Court of Justice did deal with a real estate consumer credit agreement in the present reference for a preliminary ruling. In this case, the European Court of Justice had to deal with the question of whether the strict information requirements regarding the right of withdrawal also apply to real estate consumer credit agreements. This makes it clear that the information requirements regarding the right of withdrawal apply a fortiori to all other consumer credit agreements.
What does the ECJ ruling mean for the consumer?
If consumers have concluded a loan agreement after 11 June 2010, they have excellent chances of successfully revoking their loan agreement following the ECJ's ruling.
You therefore have the option of
- For debt restructuring - Expensive loans can be redeemed by cheaper loans without an early repayment penalty.
- Expensive forward loans can be revoked without "penalty payment".
Which credit agreements can you revoke after the ECJ ruling?
You can revoke ALL credit agreements if the requirements are met!
For example, you can revoke real estate loans, forward loans, loans for vehicles, cars and for televisions and other consumer goods. You can also revoke leasing contracts
What happens after revocation?
After revocation, the contract is reversed. This means that you get back the instalments you have paid and then have to pay back the loan amount to the bank. Either you "borrow" the money from another bank or, as often happens, you agree on more favourable conditions with the previous bank.
Federal Supreme Court (BGH) as a spoilsport - Has it destroyed the "revocation joker"?
The BGH ruled in a decision (XI ZR 198/19) that the banks, which complied with the requirements of the German legislator, effectively informed the customer of his or her right of withdrawal - regardless of whether the national German law complies with the requirements of the Consumer Credit Directive or not.
In another decision, the BGH (XI ZR 581/18) stated that the EU Consumer Protection Directive does not apply to real estate loans secured by real estate liens and that only national courts decide on the conformity of national legislation with the Directive.
Therefore, revocation can currently only be considered if the bank has independently changed the official model revocation instruction and has made mistakes in doing so. In this case, the bank can no longer invoke the legal fiction of the official model cancellation policy.
Therefore, let us give you legal advice so that the revocation is a win-win situation for you.
We are happy to help you.
GoldbergUllrich Rechtsanwälte (as of text: 30.04.2020)
