Interest-bearing accounts: German savings banks called to order

Posted on Oct 11, 2021, 12:15 PMUpdated Oct 11, 2021, 3:21 PM

No sleight of hand with interest rates on the backs of consumers. By virtue of a recent court decision, Gerhard Schechinger, a retiree from Leipzig, will be paid late interest for his savings accounts whose variable rates had been reduced by his savings bank to zero. Like 1,300 other clients who joined a class action lawsuit against “Sparkasse Leipzig”, he won his case at the German Federal Court in Karlsruhe.

Judges ruled Thursday that financial institutions can only adjust interest rates in savings contracts based on clear criteria and in a transparent manner. These conditions were far from being met, believes justice, since the Sparkasse Leipzig had announced these changes through simple posters in its agencies. She thus acted “like a lord” imposing his laws, criticized the president of the civil court, Jürgen Ellengerger. He does not dispute the impact of the drop in interest rates on the Sparkasse business model, but the way it is passed on and communicated to customers.

No “unlimited discretion”

This is an “important step for increased consumer protection”, commented the financial market supervisory authority, BaFin, welcoming that the judgment condemns the “unlimited discretionary power” of credit unions. saving. The German financial policeman had already published last June an order obliging credit institutions to inform their customers of the counterproductive impact of rates and to offer them amendments to contracts. He will now examine the objections of the savings banks in the light of the Karlsruhe judgment.

The case is not closed, however, as the Dresden Civil Court will now have to define a method to calculate the benchmark rates fairly. The judges of Karlsruhe plead for these rates to be adjusted monthly, according to the long-term rates published by the Bundesbank.

Second blow for German banks

For German banks, it is a new blow after a judgment which had already prohibited them last April from modifying bank charges without the explicit consent of their private customers. Deutsche Bank alone should reimburse 300 million to its customers, she assessed last June.

The impact of the new Federal Court ruling on German savings banks has not yet been quantified. Customers of the Sparkasse Leipzig would have lost an average of 3,100 euros per contract, however calculated the consumer organization of Saxony, which supported the complaint. In other words, this single case would already amount to more than 4 million euros.

The shock wave is likely to spread to all savings bank networks, since other cases are being examined in several regional jurisdictions and the decision of the federal court will set a precedent. Consumers who were not part of the class action will have to file an individual complaint to possibly recover the lost amounts. The BaFin however asked them to verify the limitation periods, generally of three years, linked to these savings contracts often concluded before 2010.

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