Fee dispute BGH ruling costs banks millions

As of: 06/17/2021 3:40 p.m.

Deutsche Bank and Commerzbank have to set up provisions in the three-digit million range because of the BGH’s fee ruling. Savings banks and Volksbanks do not provide any information. The decision of the Federal Court of Justice (BGH) on possible fee reclaims from bank customers is costing the industry millions. Commerzbank expects charges “in the mid double-digit million range”, which are to be booked in the second quarter of 2021, said the CFO of the Frankfurt group, Bettina Orlopp. The ruling is also likely to have an impact on earnings. However, the bank is sticking to the forecast for 2021 of income above the previous year’s level. Thanks to the income from the IPO of the US startup Marqeta, Commerzbank will be able to offset the burden of the BGH ruling, Orlopp said. The second largest German commercial bank has held a stake in the US company since 2015. The amount of their current share is not known.

Deutsche Bank speaks of 300 million euros

Last week, Deutsche Bank was the first institute to issue an estimate of the possible burdens from the BGH ruling. CFO James von Moltke spoke of a total of around 300 million euros. The bank therefore wants to set aside a provision of 100 million euros in the second quarter for possible customer claims. In addition, the institute expects earnings losses of around 100 million euros each in the second and third quarters.

Von Moltke admitted that the Karlsruhe judges’ verdict caught the banking industry off guard. The burdens and yield losses are only temporary. By the fourth quarter, Deutsche Bank will have found solutions to how it can implement fee increases in accordance with the new rules.

BaFin is sounding the alarm

Savings banks and Volksbanks are holding back with statements about possible charges and provisions. A spokesman for the savings bank association DSGV wanted to respond to the request of tagesschau.de do not comment on the subject. A spokeswoman for the largest German savings bank, the Hamburger Sparkasse, said that there had been very few inquiries from customers about the BGH ruling. Therefore, she could not give any information on possible burdens.

The financial supervisory authority BaFin expects the ruling to have serious consequences for the entire industry. “That has the potential to become really expensive for banks. We would not rule out the possibility of half of the annual surplus being in the order of magnitude, which can stand in the fire,” said interim chief Raimund Röseler in mid-May.

Unclear number of reimbursement requests

However, it is still unclear how many customers actually request the reimbursement of previous fee increases. they have to become active themselves. Industry observers also assume that the financial institutions will examine each application individually, so there will be no flat-rate reimbursement.

At the end of April, the Karlsruhe judges decided in proceedings involving the Deutsche Bank subsidiary Postbank that banks must obtain the consent of their customers in the event of changes to general terms and conditions. The clause according to which financial institutions can assume tacit approval if customers do not object to a change within two months, disadvantageous customers inappropriately. Ref .: XI ZR 26/20

BGH on Legal Tech When the software replaces the lawyer

Status: 06/17/2021 6:46 a.m.

Anyone who wants to draw up an individual contract goes to a lawyer. That’s how it was before. In the meantime, however, this can also be done online, without legal assistance. The BGH is now examining whether this is permissible. What are the sticking points?

By Kerstin Anabah and Pia Brandsch-Böhm

What is the specific case about?

The publisher Wolters Kluwer offers the legal document generator “Smartlaw”. With the help of the software, private individuals and companies can create and then purchase individual legal documents, such as rental agreements. To do this, customers have to answer 30 to 40 questions. The whole thing was “modeled on the conversation with the lawyer”, according to the original advertisement.

Wolters Kluwer is not admitted to the bar and is not licensed to provide legal services. The Hamburg Bar Association has therefore sued the publisher (Az. I ZR 113/20). She sees the Legal Tech offer as an anti-competitive violation of the Legal Services Act. It regulates who is allowed to provide legal services – for example lawyers or debt collection companies.

How have the courts decided so far?

The Cologne Regional Court gave the Bar Association in law. It saw in the contract generator a violation of the Legal Services Act. Wolters Kluwer appealed against this to the Cologne Higher Regional Court – with success. According to the Cologne Higher Regional Court, this is not a legal service, as there is no human (service) performance. The documents would be created by software. There is no customer contact because the customer operates the software himself. In addition, no legal examination of the individual case is necessary, since the program runs according to a fixed routine and a situation is only inserted into a given grid.

Have there already been judgments in similar cases?

As early as 2019, the Federal Court of Justice ruled on a legal aid program in the ruling on “kleineermiete.de”. At that time the question was whether a rental price calculator represents a collection or a legal service. With this online calculator, customers could see by entering their data whether they were paying too much rent and immediately defend themselves against it. For this purpose, the program directly commissioned the company behind it to enforce the rights. The BGH has declared this rental price calculator to be permissible.

How the first civil senate decides in the case of the contract generator is open. The industry for such offers is booming. The ruling is therefore likely to be another important step towards greater legal certainty.

Hearing before the BGH Are CumEx transactions a criminal offense?

Status: 15.06.2021 4:41 p.m.

The first proceedings on CumEx transactions have begun at the Federal Court of Justice. The judges must decide whether the deals are a criminal offense as tax evasion. The verdict will have far-reaching consequences. From Klaus Hempel, ARD legal editors They led to one of the biggest tax scandals in German history, in which the German tax authorities were duped and the state suffered billions in damage: the CumEx business. Investors used loopholes in legal regulations to make big money. They were supported by banks and top lawyers who work in large commercial law firms.

The state escapes taxes running into billions

Essentially, these CumEx deals were about stock dividends. These are profits from stock corporations that are distributed to shareholders. Taxes are deducted directly from this and transferred to the tax office. The shareholders can get the money back under certain conditions. In the CumEx business, investors have used an extremely sophisticated system and have taxes reimbursed that were never paid. At some point the dizziness was exposed. In March 2020, the first defendants were convicted by the Bonn District Court: two British stock traders involved in such transactions. Because they cooperated closely with the prosecutor, they were sentenced to relatively mild suspended sentences. Nevertheless, they appealed to the Federal Court of Justice. He must now clarify in a landmark judgment whether the CumEx business is actually a criminal tax evasion. “In the present proceedings, the Federal Court of Justice is dealing for the first time with so-called CumEx transactions from the point of view of tax evasion,” explains Chief Public Prosecutor Thomas Heise from the Federal Prosecutor’s Office. “He will decide whether the peculiarities of these transactions allow a tax that has not actually been paid to be reclaimed from the tax authorities.”

June 15, 2021

Warburg-Bank rejects responsibility

One of the two stock traders had earned 14 million euros from the deals, which he is supposed to repay. The private bank MM Warburg was also involved in the business. According to the judgment of the Bonn Regional Court, 176 million euros are to be collected from her. The bank is defending itself against this at the BGH. Your lawyer Ali Norouzi believes that the law does not justify skimming off the funds. “There were no representatives of the bank in the dock, but traders from other companies who traded for their own account and not for the bank,” argues Norouzi. “They made substantial profits and damaged the bank considerably. Their actions cannot be attributed to the bank.”

06/01/2021

Judgment expected at the end of July with far-reaching consequences

Nevertheless, the public prosecutor said that the millions in profits would have to be collected. The Bonn Regional Court followed this legal opinion. The Federal Court of Justice now has the final say. He plans to announce his verdict at the end of July. His decision is very significant for the lower level of justice. Hundreds of suspects are being investigated for tax evasion nationwide. If the BGH evaluates the CumEx transactions as criminal tax evasion, there will probably be further convictions in which those primarily responsible must expect long prison sentences. File number: 1 StR 519/20

From Kerstin Anabah and Gigi Deppe, ARD legal editors The Federal Association of Consumer Organizations sued Postbank. He considers certain clauses with which the bank can change its general terms and conditions to be ineffective. The background: Many customers do not even notice when their bank changes the fine print. You only feel that, for example, fees are suddenly being debited for a free account or that other services of the financial institution are becoming more expensive. Although they have received an announcement from the bank that the contract should be changed, very few delve into the small print. Most of the customer’s contracts say: We will send you an announcement two months in advance. And if you do not object, then that counts as consent. Then our contract is changed.

Clauses not transparent enough

However, the Federal Association for Consumer Centers does not consider such clauses to be transparent enough. They did not reveal the reason for the change in the general terms and conditions, nor did they indicate the limits. The association therefore demands that the clauses may no longer be used. “What bothers us about the clauses is that they are simply far too intransparent for the customer,” explains David Bode from the federal association. “When the contract is concluded, he cannot foresee where the journey will go for him.” Ultimately, these clauses could also be misused to turn them into a completely different contract, says Bode: “I can turn a free account into a paid account, I can force certain software on the customer to use online banking.”

Decision of the lower courts

However, the Cologne Regional Court initially dismissed the consumer advocate’s complaint. The federal association was also unsuccessful at the Cologne Higher Regional Court. In the opinion of the judges of the OLG, the clauses correspond to the legal requirements. The relevant European legal regulations provide for the possibility of such tacit consent by customers. Therefore, banks may also agree on these in general terms and conditions. Because of its fundamental importance, however, the judges allowed the appeal to the Federal Court of Justice. In addition, there was a legal hint from Luxembourg. The European Court of Justice, the highest court in the EU, decided a case from Austria last November and gave the general direction: The small print of the banks can certainly be checked by the courts to see whether it disadvantages customers. That was the reason for the Federal Court of Justice, Germany’s highest civil court, to take a closer look at whether it is okay for the bank to change a contract without the express consent of the customer.

Judgment of the Federal Court of Justice

The BGH today announced a judgment in favor of consumers. In the opinion of the federal judges, such clauses are generally ineffective. The banks could introduce extensive changes to contracts, for example also in savings contracts, without the customers having to give their express consent. That would contradict the basic idea of ​​the law. Such clauses would unduly disadvantage consumers. As a result of the ruling, numerous credit institutions will now have to change their clauses. The lawyer of the defendant financial institution, Postbank, had pointed out that it was a mass business for the financial institutions and raised the question of how it should be implemented in practice if every individual customer had to give his consent to changed conditions. The Federal Court of Justice pointed out, however, that the previous rule gave the banks too much power. They could completely change contracts in this way: “For example, the bank could recruit customers with free current accounts or free custody accounts and, after they have concluded a contract with it, introduce account management fees or custody fees using the disputed clause,” said the presiding judge Jürgen Ellenberger . In the future, most bank customers will certainly get more mail from their financial institution. However, it has not yet been determined whether many customers will really say no to a contract change when asked. Because the bank may then try to terminate the contract.

VW not only has to pay damages to damaged diesel buyers. The company now has to reimburse a customer for the cost of financing the car because she took out a loan to buy the car. That was decided by the Federal Court of Justice in Karlsruhe.

Financing by home loan

In the specific case, the plaintiff had bought a used VW Golf Diesel from a car dealership in 2013. To finance the car, she signed a loan agreement with the VW bank and borrowed more than 3,000 euros. Later it turned out that the manipulated EA 189 diesel engine was installed in the Golf, which only complied with the prescribed exhaust gas values ​​on the test bench, but not in road traffic. After the diesel scandal became known, she returned the Golf and demanded compensation. That was awarded to her – after deducting the interim mileage. In addition, the VW customer demanded the interest she had paid on the financing loan. This was already awarded to her in the lower court, but Volkswagen appealed to the BGH on an appeal. This has now made the final decision. Regarding the reasons for the judgment, the chairman of the BGH judge Stephan Seiters said that in the event of immoral damage, the claim for damages would also include these costs: “The buyer is to be treated as if it had not been purchased.”

A precedent ruling by the BGH?

To what extent the judgment can also be transferred to other VW customers, the plaintiff and defendant disagree. According to the purchaser’s lawyer, Florian Rosing, the BGH ruling is significant for thousands of customers, as the majority of car purchases were financed by loans. It is about an interest refund of several thousand euros on average. VW announced, however, that the BGH judgment could not be applied to all financed vehicle purchases. Most of the VW Bank loan agreements contained a “documented right of return” whereby the customer could return the vehicle at an agreed price at the end of the loan period. The BGH did not currently have to decide on the interest claim for these contracts. So far, courts have decided differently whether the claim for damages also includes the financing interest. Ref. VI ZR 274/20 With information from Klaus Hempel, ARD legal editors