On 25 November 2024, Christian Bock, Consumer Protection Officer of the German Federal Financial Supervisory Authority (BaFin), issued a strong call to action for customers holding premium savings contracts. Christian Bock explained the urgent need for customers to assert their claims for interest recalculations before the year-end to avoid potential statute-bar limitations, while also shedding light on BaFin’s decision to appeal a ruling by the Frankfurt Administrative Court overturning a general order on interest adjustment clauses.
Premium savings contracts, popular around the turn of the millennium, have been at the centre of legal disputes regarding improper interest calculations by banks and savings institutions. Many customers with such contracts may still claim overdue interest payments, but the deadline for such claims in some cases may expire in just a few weeks. Christian Bock urged affected customers to contact their banks or savings institutions immediately to have their contracts reviewed, assert their claims for interest, and halt the limitation period.
Christian Bock clarified the concrete actions customers must take. They should issue a written demand to their financial institutions, requesting interest adjustments based on rulings from the German Federal Court of Justice (BGH), such as the landmark decision from 9 July 2024. Consumer advocacy groups offer template letters to facilitate this process. To prevent the three-year limitation period for claims from expiring, customers can approach the relevant dispute resolution bodies, initiate legal proceedings, or request a written waiver of the statute of limitation defence from their institutions. Legal counsel or consumer advice centres can assist customers in determining the validity of their claims and the applicable limitation deadlines.
To safeguard consumer interests, BaFin issued a general order three years ago addressing unlawful interest adjustment clauses in premium savings contracts. These contracts, often entered into between 1990 and 2010, featured variable interest rates and premium payments based on cumulative savings contributions. However, banks included clauses granting themselves broad discretion to adjust interest rates unilaterally, which the BGH ruled as invalid in a series of judgments dating back to 2004. The court found such clauses lacked the transparency required to enable customers to anticipate and verify rate changes.
BaFin’s general order compelled financial institutions to notify customers of these rulings and recalculate interest rates in accordance with the BGH’s standards. Alternatively, institutions were required to offer amended contracts reflecting the lawful terms. According to the consumer advocacy group, this affected approximately 1.1 million contracts in 2021, with customers being underpaid by an average of €1,000 to €2,000 in interest.
In recent weeks, the Frankfurt Administrative Court annulled BaFin’s general order, asserting that the institutions’ actions did not constitute significant, lasting, or repeated breaches of consumer protection laws. BaFin disagrees with this interpretation and has filed an appeal, seeking greater legal certainty for its regulatory framework through a higher court ruling. Bock stressed that the administrative court’s decision does not invalidate customers’ civil claims for interest adjustments under the BGH’s case law.
Since 2004, the BGH has consistently invalidated such clauses for lacking transparency, finding that customers were unable to predict potential interest changes or verify adjustments. These rulings have formed the legal basis for recalculating interest payments, with the recent BaFin regulations aimed at enforcing compliance among financial institutions.
