CJEU strengthens consumer rights: “Revocation joker” for millions of consumer credit agreements

The CJEU found that many con­sumer loan agree­ments can still be re­voked years later.In its rul­ing of Septem­ber 9, 2021, The Court of Justice of the European Union (CJEU) found that many con­sumer loan agree­ments can still be re­voked years later (with the ex­cep­tion of real es­tate loan agreements).

The reason for this is that the clauses used by Ger­man banks in loan agree­ments are of­ten faulty. The Lux­em­bourg judges cri­ti­cized above all the in­ac­cur­ate in­form­a­tion or com­pletely in­ad­equate in­form­a­tion in the loan agree­ments. For ex­ample, the ref­er­ence to the ab­stract amount of the de­fault in­terest rate was not suf­fi­cient; in­stead, the banks al­ways had to spe­cify a con­crete in­terest rate at the time the con­tract was con­cluded. The mere ref­er­ence “The an­nual de­fault in­terest rate is 5 per­cent­age points above the re­spect­ive prime rate.” (or sim­ilar) is there­fore not sufficient.

In ad­di­tion, the CJEU stated that the cal­cu­la­tion method of a com­pens­a­tion due in the event of early re­pay­ment (early re­pay­ment pen­alty) must also be in­dic­ated in an “eas­ily com­pre­hens­ible man­ner” for the av­er­age con­sumer, which was also not the case in the pro­ceed­ings there. This also con­sti­tuted a reason for re­vok­ing con­sumer credit agree­ments. In the vari­ous pro­ceed­ings against the banks of the car man­u­fac­tur­ers Volk­swa­gen, Škoda and BMW, the judges from Lux­em­bourg held that the right of re­voc­a­tion could still be ex­er­cised years later, as these same banks had only in­ad­equately in­formed con­sumers about the legal situ­ation when the loan agree­ments were con­cluded (Cases C-33/20, C-155/20 and C-187/20). The in­cor­rect or, in some cases, non-​existent in­form­a­tion had the con­sequence that the time limit within which the re­voc­a­tion must be de­clared in prin­ciple never began to run. The con­sequence is a quasi “per­petual right of with­drawal” in fa­vor of consumers.

In ad­di­tion, the CJEU has fi­nally cla­ri­fied the ques­tion of whether such a right of with­drawal can be for­feited by the con­sumer. This is be­cause banks of­ten countered con­sumers’ claims by say­ing that it would be dis­loyal to in­voke the right of with­drawal after the con­tract had of­ten been in force for many years. The claim was there­fore for­feited. The CJEU has now clearly re­jec­ted this ar­gu­ment. Ac­cord­ing to the CJEU, a bank that has pre­vi­ously failed to prop­erly in­form the con­sumer is pre­cluded from in­vok­ing the de­fense of forfeiture.

The rul­ing thus massively strengthens con­sumer rights overall.

The CJEU’s de­cision now en­ables con­sumers to with­draw from fin­an­cing and thus po­ten­tially gain an im­mense fin­an­cial ad­vant­age. This is be­cause re­voc­a­tion means that the con­tracts in ques­tion are re­versed, so that the down pay­ment and loan in­stall­ments must be re­fun­ded. In re­turn, con­sumers must re­turn the ser­vice re­ceived, i.e. the vehicle in the case of vehicle loan agreements.

As a res­ult of the de­cision, it stands to reason that banks will now have to reckon with a huge wave of re­voc­a­tions. This is likely to af­fect not only car loan agree­ments, but rather all forms of con­sumer credit agreements.

Us­ing the ex­ample of a car loan, it im­me­di­ately be­comes clear the enorm­ous op­por­tun­ity this of­fers con­sumers: It is noth­ing less than the pos­sib­il­ity of be­ing able to re­turn their vehicle without loss, ir­re­spect­ive of the diesel scan­dal, if the pur­chase was fin­anced via a loan!

With its rul­ing, the CJEU went against the case law of the Fed­eral Court of Justice (BGH), which in the spe­cific case had re­jec­ted the ap­peals of two car buy­ers as re­cently as Novem­ber 2019 and ruled that con­sumers can­not re­voke their car loans years after the con­tract was con­cluded – a deeply consumer-​unfriendly rul­ing that sig­ni­fic­antly weakened the legal po­s­i­tion of con­sumers. This has now been re­vised by the CJEU.


Are you con­sid­er­ing with­draw­ing from your loan agree­ment? Our at­tor­neys Dr. Susanne Schmidt-​Morsbach and Dr. Wolfgang Schirp, who spe­cial­ize in bank­ing law, will be happy to ad­vise you at any time, free of charge and na­tion­wide. We will re­view your con­tract free of charge and without ob­lig­a­tion. Take your chance!

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