Banks charge excessive fees for depositing money, resulting in a negative interest rate.
Federal Court of Justice Rules on Custody Fees for Bank Balances: A Guide for Customers to Claim Refunds
The Federal Court of Justice (BGH) in Germany has recently issued rulings (XI ZR 61/23, XI ZR 65/23, XI ZR 161/23) that challenge the legality of certain custody fees charged by banks on customers' balances. Here's what affected bank customers need to know about claiming refunds.
Background:
Between 2015 and 2022, some financial institutions imposed custody fees on customers' balances as a means of covering negative interest rates imposed by the European Central Bank (ECB). However, these fees were passed on to customers without offering commensurate interest rates.
Model Proceedings:
Consumer associations took issue with this practice, considering it illegal, and initiated model proceedings against several banks. The BGH has now partially ruled in their favor.
New BGH Rulings:
The BGH has categorically excluded custody fees for day-to-day and savings accounts. However, for fees charged on checking account balances, the court considers each case separately regarding the specific wording of the fee clause. If the clause indicates the balance on which the custody fee applies, it is deemed valid.
Claiming Refunds:
It's essential to note that banks are not obligated to refund these fees directly to consumers if they were charged without a contractual basis and within an unprescribed time. Affected investors can only reclaim the incorrectly calculated fees on their own initiative.
Verification Periods:
In principle, the verification period for the refund of unauthorized bank fees is three years. Customers can reclaim negative interest charged by banks for balances in 2022 and later upon request. For fees imposed in 2021 and earlier, affected customers can rely on the European Court of Justice's rulings that extended the limitation period for recovery.
Steps for Claiming Refunds:
- Evaluate Eligibility: Determine whether the BGH rulings apply to your specific case.
- Gather Documentation: Collect bank statements and other relevant documents detailing the custody fees you've paid.
- Contact Your Bank: Reach out to your bank’s customer service or legal department to inquire about the process for claiming back the fees.
- Formal Claim: If the bank is unwilling to refund the fees voluntarily, you may need to submit a formal complaint or claim.
- Consumer Protection Assistance: If the bank refuses your claim, consider seeking help from a German consumer protection agency.
- Legal Action: If other avenues fail, you may need to consult a lawyer to initiate a lawsuit against the bank.
- Monitor Legal Developments: Stay informed about any updates or new rulings that might affect your claim.
In light of these developments, affected customers are encouraged to take action and seek refunds for the custody fees they've paid. By following these steps, investors can get their money back and challenge the financial industry's improper practices.
- As a result of the Federal Court of Justice's rulings, customers who have paid custody fees on their bank balances, particularly those related to checking accounts, should verify if their fee structure adheres to the court's guidelines.
- In the case where it is found that the custody fees charged by the bank are not valid, affected customers can take the initiative to claim refunds for the unjustified fees, following the steps outlined for claiming refunds.
