Until 2014, the collection of processing fees for personal loans was quite common. However, in May and October 2014, the Federal Court of Justice ruled that the processing fees charged by banks and savings banks were unlawful. These judgments mainly relate to private consumer credit, installment and car loans or loans for real estate financing.

Credit processing fee

For example, the processing fees were charged for checking the creditworthiness of a customer and for organizational matters. Thus to obtain data of the Schufa or Creditreform and to calculate the creditworthiness of the customer. However, the court ruled that such activities are purely in the interest of the bank and thus are not attributable to the customer.

The processing fees averaged between one and four percent of the loan amount spent. According to the court order, customers who paid such a personal loan processing fee less than ten years ago may claim this amount back from their bank or savings bank. However, the customer has to become active himself. The credit institutions do not automatically pay the processing fees back. This refund must be requested accordingly. Sample letters are available online that can be downloaded and printed out.

Inadmissibility of the processing fees

The inadmissibility of the processing fees was decided on 13 May 2014 by the Federal Court of Justice in two revision proceedings (Ref. XI ZR 170/13, XI ZR 405/12). In these proceedings, a one-time processing fee of 1,200 euros was levied by Postbank. The Consumer Protection Association also complained that the National Bank’s General Terms and Conditions imposed a one-per-cent processing fee. The judgment explicitly spoke of consumer credit. Thus, personal loans were assessed accordingly, installment loans for a television, a car or furniture.

According to the Civil Code, real estate loans are also considered consumer loans. However, the concrete cases of the judgments were not about real estate financing. However, they were not excluded. The court’s arguments also apply to the nature and form of real estate loans. In this respect, even consumers with a real estate loan are entitled to claim back their paid processing fees.

For subsidized loans such as KFW loans, the processing fees remain effective. In these cases, the bank or savings bank would have provided a genuine service to the client, acting as a mediator between the client and the promotional bank. The district court of Itzehoe declared these processing fees on 01.07.2014 and the district court of Bückeburg on 11.09.2014 justified (Az. 1 S 187/13, Az. 1 S 60/13).

Scope of current BGH judgments

The development banks in general argue that the current BGH judgments do not apply to them. They would process and award the loans in accordance with public law. Landeskreditbank Baden-Wuerttemberg was granted an appropriate hearing by the District Court of Stuttgart on this issue. Thus, this bank did not have to pay back the processing fees for a loan – judgment of 26.08.2014 (Az. 1 C 1279/14).

The processing fees or termination fees for home savings contracts are not affected by the judgment of the Federal Court. On the contrary, these fees have already been expressly declared to be correct in another ruling of the BGH of 2010. However, if the building society lends a loan and then calculates processing fees, the situation is unclear. Presumably, these fees are then not legally effective, but clearly not decided.

Even for business start-up loans, no decision has yet been made on the extent to which the processing fees may or may not be levied. For commercial loans, there is currently no effective case law with regard to the processing fee.