Slicing Through the Knots: The Fall of BaFin's General Ordinance on Premium Savings Contracts
Piecing It Together: Jens H. Kunz and Tobias B. Lühmann's Take
Restriction imposed on BaFin's broader consumer protection actions by administrative court
In a turn of events, the Federal Financial Supervisory Authority (BaFin) has found itself in hot waters. Civil courts have been juggling premium savings contracts, previously offered by credit institutions, and BaFin's response was a general ordinance in 2021, citing consumer protection as the reason. But alas, the administrative court in Frankfurt a.M. has come to a conclusion that leaves BaFin's measures hanging by a thread.
Variable Interest Rate Debacle
The debate stems from the 90s and early 2000s when savings banks and cooperative banks offered premium savings contracts with variable interest rates. If you dived deeper into these contracts, you'd find interest adjustment clauses that were declared invalid by the Federal Court of Justice (BGH) in 2004. Ever since, banks have been left popularly known as the "who, what, and when" of the interest rate calculation.
Supplementary Contract Gone South
As per the BGH, contractual gaps ought to be bridged through fair and court-determined supplementary contract interpretation. Instead, banks regularly revised existing contracts with interest adjustment clauses originally built for new customers, bypassing consultation with customers.
BaFin's General Ordinance: A Buzzkill
When customers and consumer protection associations pestered BaFin about banks' one-sided approaches, the case ended up in the hands of BaFin, leading to the General Ordinance which mandated banks to share information about the nullified interest adjustment clauses and either commit to a supplementary contract interpretation or offer amendments with revised interest adjustment clauses.
Backlash from the Banks
A whopping 1,156 banks filed an objection against the general ordinance. The case eventually saw a courtroom battle, with Frankfurt Administrative Court throwing some well-deserved cold water on BaFin's harmless do-gooder act.
Banking on the Righteous
Frankfurt Administrative Court tossed the general ordinance, asserting the necessity of a consumer law infringement to justify the general ordinance under § 4 Abs. 1a Finanzdienstleistungsaufsichtsgesetz (FinDAG). The court believes that an administrative act should be grounded in a specific consumer protection norm, and not just general terms and conditions under the German Civil Code (BGB).
Doubts and Predicaments
Even if it seems there was no infringement of § 306 Abs. 2 BGB—a consumer protection norm—the court action, as of the administrative act, was void since the supplementary contract interpretation's outcomes were unpredictable or judicially unclear. Thus, banks could not be accused of mishandling the interpretation.
The Dawn of Daylight
With this judgment, Frankfurt Administrative Court has limited BaFin's power to impose administrative requirements on banks in collective consumer protection cases based on civil law. Instead, individual (consumer) rights enforcement through civil law channels should be prioritized over supervisory measures by BaFin. It remains to be seen whether this will stand in the ongoing appeal by BaFin.
*) Dr. Jens H. Kunz is a partner and Dr. Tobias B. Lühmann is an associated partner at Noerr.
Enrichment Data:
The current status and any further court rulings regarding the legality of the BaFin's General Ordinance on Premium Savings Contracts are yet to be found in the search results. For updated information, it would be best to refer to the official BaFin website or legal news sources. It's important to note that BaFin continues to play an active role in shaping financial regulations and warnings for unauthorized financial activities, as evidenced by their recent residential real estate buffers and unauthorized services warnings[1]. Nevertheless, specific details about the General Ordinance on Premium Savings Contracts remain rather elusive in the current search results.
- The Frankfurt Administrative Court has questioned the validity of BaFin's General Ordinance on Premium Savings Contracts, stating that it lacks a clear consumer protection basis under the German Civil Code (BGB).
- The court has suggested that individual consumer rights enforcement through civil law channels should be prioritized over supervisory measures by BaFin in collective consumer protection cases.
- In response to BaFin's General Ordinance, 1,156 banks have filed an objection, leading to a courtroom battle over the legality of the ordinance.
- The finance industry offers amendments to premium savings contracts, potentially revising interest adjustment clauses, following the nullification of the original clauses by the Federal Court of Justice (BGH).
