Challenge to fees charged by lenders in the Czech Republic

Over the last few months, the lawfulness of certain fees charged by Czech retail lenders to their borrowers has been challenged. Tens of thousands of customers have reportedly claimed that fees they paid should be refunded. Several first-instance decisions have been issued that ruled that fees were charged unlawfully and should be refunded. These decisions may have implications for the way banks charge fees, not only in the retail sector but more widely.

A German Federal Court of Justice decision in 2011 found that it was unlawful under German law for a bank to charge its consumer customers a fee for maintaining an account evidencing the disbursements and repayments of a loan. The German court found, in essence, that the maintaining of the loan account was entirely in the bank’s interest and that an obligation to pay the fee constituted an unfair term under provisions of the German Civil Code implementing Council Directive 93/13/EEC on unfair terms in consumer contracts. The directive has also been implemented into Czech law.

Similar types of fee are usually referred to as a ‘loan account fee’ or a ‘loan maintenance fee’ in the Czech Republic and normally amount to an equivalent of a few euros payable monthly. The German decision was published in the Czech legal press in 2012 and was quickly publicised by consumer-protection activists. Several law firms offered to represent customers against banks on a contingency-fee basis, claiming the refund of such loan account fees paid over the past four years, which is the applicable limitation period. They are reported to have attracted tens of thousands of claimants, which makes the potential liability on the part of the banks significant even if the amount of the average individual claim is not…

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