Withdrawing from Loans: OLG Köln Bolsters Consumer Rights in Germany

In its ruling of November 6, 2015, the Oberlandesgericht Köln (Higher Regional Court of Cologne) once again strengthened consumer rights in cases involving withdrawal from a loan (Az.: 13 U 113/15).

In its judgment of November 6, the 13th Civil Division of the OLG Köln confirmed that even minor deviations from the standard instructions in a given case means that the bank or savings bank has provided flawed guidance on the right of withdrawal. The result is that the withdrawal period never commenced due to the flawed instructions and it is still possible to withdraw from the legacy contracts.

In the instant case, the OLG Köln followed the ruling delivered by the Landgericht Aachen (Regional Court of Aachen). The former stated that particularly the information concerning the commencement of the withdrawal period was ambiguous and did not comply with the legal requirements. The Division criticized wording such as “die Frist beginnt frühestens …” (the period begins at the earliest...) and the use of the footnote “Bitte Frist im Einzelfall prüfen” (Please check the withdrawal period in each individual case). It went on to say that these were clear deviations from the standard guidance. Moreover, the bank could only fall back on provisions conferring protective effect if the instructions used regarding the right of withdrawal perfectly matched the applicable standard guidance both in terms of its substance and form. The Division ruled that the instructions used in the case in question featured not only editorial but also clear substantive discrepancies vis-à-vis the standard guidance as far as the supplementary footnote dealing with the specified withdrawal period was concerned.

Banks and savings banks made use of flawed instructions on the right of withdrawal in the case of numerous real estate loans concluded between 2002 and 2010. As a result of this, consumers are still able to withdraw from legacy contracts. In doing so, they can benefit from the ongoing low interest rates and restructure their debts under favourable circumstances. Depending on the size of the loan, this could well entail savings amounting to tens of thousands of euros.

Consumers should nonetheless take swift action, because the right of withdrawal for legacy contracts is set to expire on June 21, 2016 due to the implementation of the EU directive on residential property loans. Lawyers who are competent in the field of banking law can examine whether the prerequisites for withdrawal from a loan have been met.

GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices in Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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