Upon early repayment of a loan, the bank must return all the costs to the customer, not only those contingent on the duration of the loan agreement, so the customer stands to recoup also part of the processing fee associated with actual granting of the loan – this is the main take-away from a CJEU judgment in a Polish case. This would appear simple enough, until one considers that the laws applicable in other countries provide for proportionate refund of interest only.

On Wednesday, 11 September, the Court of Justice of the European Union addressed an issue of considerable importance to banks, borrowers, and debt traders alike, ruling that, where a credit facility is repaid ahead of the deadline specified in the loan agreement, the duty of reducing the combined credit cost under art. 49 of the legislative At regarding consumer credit applies to all costs (including commissions and processing fees), not only to those spread out over the lifetime of the credit facility, such as interest or insurance. This is the accepted construction of art. 16.1 of the Consumer Credit Directive on which the Polish law is based. “For financial institutions, banks, and for the courts, this judgment constitutes clear guidance as to how this rule should be interpreted”, says Marek Niechciał, president of the Office of Competition and Consumer Protection. Yet the Court of Justice of the European Union itself admits that comparative analysis of the various language versions of this article renders pinpointing the exact scope of the refund impossible, with the result that different EU Member States have implemented it in different ways (...)


The Court noted, however, that comparative analysis of the various language versions of art. 16.1 of the Directive makes it impossible to establish what, exactly, falls under the heading of refund of combined credit costs provided for therein. The versions of the same provision in the Dutch, Polish and Romanian languages seem to point in the direction

of reducing costs entailed for the remaining lifetime of the agreement as originally envisaged. The German and English versions, in turn, are marked by a certain equivocality, allowing the interpretation that the costs relating to the period should be taken as a guideline in calculating the reduction. In the French, Spanish, and Italian language versions, finally, the wording refers to the interest and costs due for the remaining part of the agreement term, we read in the reasoning for the judgment. “This may mean that the level of consumer rights protection in different countries may also be varied”, emphasises Bernadeta Kasztelan-Świetlik, partner in GESSEL. “In a situation where enterprises in some EU countries refund all the costs to consumers while enterprises in other countries refund only part of the cost, we are looking at differentiation of competition conditions, which contravenes the very idea of a common market. I would hope that, in the wake of this judgment, the various Member States might uniformise their rules”, Bernadeta Kasztelan-Świetlik remarks.

Court of Justice of the European Union judgment of 11 September 2019, case C-383/18.

The full text of this article (in Polish) is available on www.prawo.pl