Unraveling the Revocation of BaFin's General Ordinance on Premium Savings Contracts
By Jens H. Kunz and Tobias B. Lühmann *
Court imposed limits on BaFin's ability to enact broad consumer protection measures collectively.
In the tangled web of financial dealings, premium savings contracts offered by credit institutions have played a significant role in recent years. Numerous disputes in civil courts revolving around these contracts have brought them under the microscope. In response to high-profile court rulings, the Federal Financial Supervisory Authority (BaFin) issued a general ordinance in June 2021, citing consumer protection as the impetus.
Interest Adjustment Clauses
By the 2000s, savings banks and cooperative banks had peddled premium savings contracts in a myriad of forms, promising variable interest rates on savings contributions. These interest rates were derived from interest adjustment clauses that, according to the Federal Court of Justice (BGH), were declared invalid in 2004. The ambiguity over how to determine the variable interest rate led to a stalemate.
Supplementary Contract Interpretation
In the eyes of the BGH, the contractual ambiguity should have been addressed through so-called supplementary contract interpretation, a fair and court-determined regulatory remedy. However, credit institutions often transferred interest adjustment clauses redesigned for new customers post-BGH ruling to existing contracts without consultation, adding fuel to consumer grievances.
BaFin General Ordinance
Fed up with this one-sided approach by credit institutions, consumers and protection associations sounded the alarm to BaFin. Despite talks with the banking industry failing to produce a solution, the BaFin enacted a general ordinance on 21.06.2021. This ordinance required credit institutions to inform their customers about the invalid interest adjustment clauses and either commit to a court-determined supplementary contract interpretation or offer an amendment contract with a suitable interest adjustment clause.
Initially, 1,156 credit institutions challenged the general ordinance, with only the objections of a handful of savings banks and cooperative banks receiving priority consideration.
No Misconduct
The Administrative Court Frankfurt a.M. sided with the credit institutions, revoking the general ordinance because it lacked a consumer protection-relevant misconduct basis, which the BaFin had cited in § 4 Abs. 1a Finanzdienstleistungsaufsichtsgesetz (FinDAG) for justification.
The verdict contains critical findings regarding the scope of application of § 4 Abs. 1a FinDAG. In the court's opinion, an administrative act in this context necessitates a violation of a specific consumer protection statute, not just general terms and conditions.
In particular, there's no infringement on consumer rights by neglecting § 306 Abs. 2 BGB. It's debatable whether this provision is a relevant consumer protection norm. However, this point is moot, as there was no violation of the BGH's requirement for supplementary contract interpretation, leading to no infringement of § 306 Abs. 2 BGB. At the time of the administrative act, the outcome of supplementary contract interpretation was neither predictable nor legally binding, making it impossible to pin the banks for breaching such an interpretation.
Authority Limited
The Frankfurt Administrative Court has confined BaFin's authority to impose administrative measures on banks under § 4 Abs. 1a FinDAG in areas of collective consumer protection based on civil law, where there's no established violation of specific civil law consumer protection statutes. Furthermore, it suggests that suspected contractual misconduct by banks should be primarily addressed through traditional civil law enforcement of individual consumer rights, not by supervisory measures from the BaFin. It remains to be seen whether this clarification of fundamental principles will stand in the ongoing appeal procedure initiated by the BaFin.
*) Dr. Jens H. Kunz is a partner and Dr. Tobias B. Lühmann is an associated partner at Noerr.
In light of the Frankfurt Administrative Court's decision, the BaFin's general ordinance on premium savings contracts was revoked due to a lack of a consumer protection-relevant misconduct basis. The court suggested that BaFin's authority in enforcing administrative measures in areas of collective consumer protection based on civil law should be limited, with civil law enforcement of individual consumer rights being the primary means to address contractual misconduct by banks.
