Credit Processing Fees: “Banks are clearly on time”
Friday, 14.11.14, written by Cornelia Teich
Until the end of the year, many bank customers can reclaim inadmissibly raised loan processing fees from their financial institution. In an interview with finanzen.de, Berlin lawyer Philipp Caba explains how much money borrowers can get back and why they should reclaim the fees as quickly as possible.
Lawyer Philipp Caba gives tips on loan processing fees
Mr Caba, the Federal Supreme Court, has recently ruled that banks, even for older contracts, have to pay back undue credit processing fees to their customers. How can I find out if I can get money back from my bank?
Philipp Caba: First of all, you should take a look at your credit documents. On the first pages you will find the details of the loan amount, the interest rate and the amount of the installments. Under these terms, the contracts also include a field for any processing fees. If a processing fee in euros or percentages should be listed in this field, these fees plus interest may in principle be reclaimed by the Bank. All borrowers who agreed their contracts on the day just less than a decade ago have the best chance of recovering these processing fees at an interest rate. It does not matter whether the credit agreement is still running or not.
Service: Corporate credit agreements and loan agreements concluded more than ten years ago and repaid within the last ten years are also affected. Here, however, the legal situation is not yet clear. However, a case law under which contractors have been reimbursed for loan processing fees already exists. Therefore, it is also worthwhile to initiate statute-barred steps.
How much money can borrowers get back now?
Philipp Caba: The amount of the processing fee depends on the one hand on the amount of the loan and on the other hand varies within the respective banks between two and four percent of the net loan amount. I know many cases where the processing fee is about three percent of the loan amount. With a loan amount of 20,000 euros, that’s 600 euros. For example, if the loan was repaid in June 2007, additional interest will be payable at the latest from that date, which already amounts to more than EUR 250. It is well worth recovering this money from the bank now.
If I’m actually entitled to a refund, what do I have to do to get the fees back plus interest?
Philipp Caba: It’s so easy. Actually, there are two options that ultimately depend on what type of person you are. If you do not want to spend a lot of effort and do not care about anything, you should look for a lawyer. He initiates all necessary steps and, if necessary, even assumes the cost risk. If successful, the lawyer will receive a performance fee, typically 25 to 40 percent of the recovery amount. If you want to have it cheaper, you should set the bank itself with the help of a model letter in debtor default and only then hire a lawyer. In this case, you do not have to give anything of your reimbursement amount because the lawyer receives his reimbursement from the bank as default damages.
Sample letters on credit processing fees
On his homepage, lawyer Philipp Caba provides a sample letter free of charge with which borrowers can reclaim the unduly levied loan processing fees from their financial institution.
It is important that a letter to the bank, whether it be you or a lawyer, does not prevent the impending limitation period of 31 December this year. For this purpose, in contrast to a costly lawsuit, a judicial reminder application makes sense. The advance court costs are here less than 50 euros, if it comes to a processing fee of a maximum of 2,000 euros. This should not be important, as the lawyer can assess the chances of success quite certainly and these costs ultimately have to be reimbursed by the bank.
By the way: If you have a legal expenses insurance covering the assertion of contractual claims, so this comes up for all costs associated with the recovery legal fees.
The onslaught on the banks is certainly great at the moment, as many customers are reclaiming their money by the end of the year. What should people do if their bank does not respond to the recovery?
Philipp Caba: Banks are currently facing a lot of such recovery claims, so the process could indeed take longer. In addition, the banks are clearly playing for time, as they have nothing to fear at the end of the year. Because most claims expire at the end of the year. Of course, this will be helpful to the banks. Only claims for restitution incurred in 2012 or later are not yet time-barred.
In your experience, how do banks react when a customer reclaims the fees?
Philipp Caba: I personally know about the 100 cases in which the recovery of the processing fees was easily and often even without legal assistance. In addition, I have looked after a large number of such cases and have rarely had to enforce the right to reclaim their claims. The banks react – at least in clear cases – to the lawyer’s claim usually cooperative. In part, they try to work out a significant difference between their case and that decided by the Federal Court of Justice or to construct an individual contract based on existing business relations. Or they resist the interest burden. Not infrequently, in my experience, the banks try with flimsy arguments that almost all are simply wrong to deny the claim and abjure bank customers. This is probably wanted and tactic.
What steps would you recommend to borrowers to ensure that their repayment claim is not time-barred as of 31 December 2014?
Philipp Caba: It is possible to bring a legal action, a judicial order for payment or a complaint procedure to the competent ombudsman. The safest and most calculable outcome is, in my opinion, the initiation of a judicial reminder procedure. The bank is unlikely to take action against a writ of reminder, so as not to incur any additional costs at its expense.
The initiation of a dunning procedure can take place with or without legal assistance. The costs for this are significantly lower compared to filing a legal action. For example, if you want to recover fees of up to € 1,000, the court costs of the legal action are € 159. The legal fees for the order for payment amount to only 32 euros. The advantage of involving the ombudsman is certainly that this procedure is initially free of charge and represents the simplest form of inhibiting the threat of prescription.
Thanks for the interview, Mr. Caba!
Personal details: Philipp Caba is an independent lawyer specializing in litigation in the field of general civil law and as a public law reviser.