CJEU: Part of the credit grant commission can be recovered when it is repaid in advance

In an important decision related to consumer rights in the financial field, the The Court of Justice of the European Union (CJEU) in its ruling in case C-76/22, on 17 October, ECLI:EU:C:2024:890has addressed the problem of early repayment of mortgage loans, making it clear that banks are obliged to provide detailed information about the commissions attached to these loans.

The case arises from a case filed in Poland, where a consumer requested a refund of part of the commission she paid when she subscribed to a mortgage loan for a period of 360 months. However, the bank rejected his request after the entire loan was paid back early, which was done 19 months after the contract was signed. The user argued that the commission should be partially refunded, as the remaining term of the contract at the time of the refund was 341 months. Because the financial institution refused, she had to go to court.

The Polish court, when they received the case, raised doubts about the correct interpretation of the European Union Directive governing real estate credit contracts. In particular, he questioned whether, in cases of early repayment, a partial refund of the commission related to the loan should be given, and whether it was reasonable to assume that these costs were intrinsically linked to the length of the contract.

Through its ruling, the CJEU emphasized that it is the duty of the mortgage credit lender to provide the consumer with accurate and differentiated information about the related costs. This obligation becomes a guarantee of the user’s right to receive accurate information about the terms of the credit.

In its decision, the CJEU clarified that if the financial institution does not provide information which allows to know whether or not the costs are dependent on the duration of the contract, it must be understood that the costs related to the commission are dependent on that period and, therefore, subject to reduction in case of early repayment. This principle establishes that consumers should not be penalized for the inaction or lack of transparency of the supply agencies.

In this sense, the CJEU concludes:

‘(…) Article 25(1) of Directive 2014/17 must be interpreted as meaning, in the absence of information provided by the lender that allows a national court to determine whether a commission has been paid ​​​​​​at the time of decision that a mortgage credit contract is included in the category of costs that are independent of the duration of that contract, the court said that the court must consider that such of commission covered by the right to reduce the total cost of the credit established in that provision».

Moreover, the court emphasized that simple fact Commission is paid ​​​​through a single payment​​​​this does not mean that the cost is independent of the duration of the contract, and in this sense it indicates: «(…) A national court cannot accept that, just because the consumer has paid a cost​​​​​​in one payment​​​​at the time of the conclusion of the mortgage credit contract, that cost is part of the costs that are independent of the length of the contract (…)».

However, the CJEU also made it clear that EU law it does not specify any particular method or method for calculating the reduction in the total cost of credit. This aspect has to be dealt with by the Polish national court, whose duty it is to determine a calculation that ensures the effective protection of consumer rights.