18. Apr 16

Withdrawing from loans and reimbursement of early repayment penalty

It is still possible to withdraw from a loan even after it has been prematurely paid off. After successfully withdrawing from the loan, the consumer can reclaim his early repayment penalty.

GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London conclude: If a loan is prematurely paid off with an early repayment penalty, this does not result in forfeiture of the right of withdrawal. That was the decision of the Oberlandesgricht Hamm (Higher Regional Court of Hamm) in its ruling of November 4, 2015 (Az.: 31 U 64/15). After successfully withdrawing from the loan, the consumer is entitled to reclaim his early repayment penalty.

In the instant case, a woman had concluded several loan agreements and then prematurely paid these off in 2012, for which she paid an early repayment penalty amounting to just under 49,000 euros. She eventually withdrew from the loan agreements in July 2014 and sued for reimbursement of the early repayment penalty.

The claim was unsuccessful at first instance. While the Landgericht (Regional Court) did acknowledge the flawed guidance concerning the right of withdrawal, it also held that this right had already been forfeited. The Court pointed out that almost seven years had gone by since the agreements were concluded and the bank was justified in assuming that the plaintiff would no longer make use of her right of withdrawal following the termination agreements from the summer of 2012 and payment of the early repayment penalty.

However, the OLG Hamm overturned this judgment and ruled in favour of the plaintiff. It held that the plaintiff had effectively withdrawn from the loan agreements and the guidance used pertaining to the right of withdrawal deviated from the standard instructions. The OLG criticized, among other things, the use of a footnote which stated “Bitte Frist im Einzelfall prüfen” (Please check the withdrawal period in each individual case). As a result, the withdrawal period never commenced and the plaintiff was able to withdraw from the loans without any time restriction. Moreover, the right of withdrawal had not been forfeited. The Court went on to say that the bank could not fall back on arguments relating to its legitimate expectations because it had brought about the situation in the first place by using flawed guidance regarding the right of withdrawal. Furthermore, the bank could have subsequently provided the plaintiff with proper guidance at any time.

Many consumers’ chances of still being able to withdraw from their loan agreements are good if the bank has made use of flawed guidance concerning the right of withdrawal. Having said that, this so-called “ewiges Widerrufsrecht” (perpetual right of withdrawal) is set to come to an end on June 21, 2016. Consumers should therefore take swift action. In matters pertaining to withdrawal, they can turn to a lawyer who is versed in the field of banking law.

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