Decision in the ongoing dispute - BGH rules on interest calculation for premium savings contracts
Since years, there has been controversy over Premium savings contracts, under which Sparkassen and Volksbanken have entered into agreements with hundreds of thousands of customers. The fact that financial institutions could unilaterally change interest rates to their advantage has been deemed unlawful by the Federal Court of Justice (BGH) for over 20 years. However, it is not yet clear from higher court rulings how interest should be calculated for these products. Consumer protection organizations expect the Karlsruhe judges to provide clarity on this matter on this Tuesday (9:00 am).
What is a Premium savings contract?
Saver account holders receive an additional premium, in addition to the variable interest, with this product. The premium is usually tiered based on the contract term. The longer regular savings contributions are made, the higher the premium. Such savings contracts were sold in large numbers in the 1990s and early 2000s, especially by Sparkassen ("Savings for the Future", "Wealth Planning"), but also by Volks- and Raiffeisen banks ("Bonus Plan", "VRZ Future").
Why are Premium savings contracts controversial?
Many of these contracts contain clauses that grant financial institutions the unilateral right to change the guaranteed interest rate - for example: "The currently valid interest rate will be announced by posting." The bank could then adjust the interest rate to its own advantage. After examining thousands of contracts, consumer organizations concluded that savers, on average, received approximately 4,000 Euros less in interest as a result.
How have courts ruled so far?
Courts have been dealing with Premium savings contracts and their interest calculation for over two decades. The BGH ruled in 2004 that contract clauses were unlawful that allowed Sparkassen to lower their interest rates at will. Since then, the dispute has been about how high the interest should have been. In 2021, the BGH confirmed earlier judgments that many old contracts from Sparkassen contained unlawful clauses.
What calculation models exist?
In April 2022, the Dresden Higher Regional Court set a reference rate for Premium savings for the first time in an individual case: the yield of listed federal government securities with a remaining term of 8 to 15 years. At the same time, the Dresden Higher Regional Court rejected the use of the so-called "gliding average" for interest calculation, which is determined based on current and historical interest rates on the money and capital markets. Similar judgments followed in early 2023 from the Higher Regional Courts in Naumburg and Dresden in mass proceedings, which are now the subject of BGH proceedings. The Higher Regional Courts in Bavaria and Brandenburg based other calculation methods for the reference interest rate in later judgments. Jurist Michael Hummel from the Consumer Center Sachsen is therefore "very sure that the BGH will have the final say".
How many customers are affected?
In the year 2021, approximately 1.1 million premium savings contracts were in effect in Germany, with up-to-date figures not available from the Financial Supervisory Authority (Bafin) at present. The number of such contracts is likely to have significantly decreased since then, as some institutions have cancelled entire contract periods where legally possible. Premiums for ongoing contracts do not automatically include interest payments. Consumer centers have been filing model infringement lawsuits for years. The Consumer Center Saxony alone is handling nine such cases, which have been joined by 6,000 consumers.
Can banks cancel premium savings contracts?
"The longer you save, the higher your premium", Sparkassen once advertised for products like "S-Premium Savings flexibly". They promised: "You alone decide how long you want to save." However, during the low-interest phase that ended in summer 2022, many institutions tried to get rid of old contracts. This was particularly costly for them in times of zero and negative interest rates.
The dispute over the cancellation of premium savings contracts even reached the Federal Court of Justice (BGH). In May 2019, the BGH ruled: "The savings contract may not be cancelled before the highest premium rate has been reached." Consumers must therefore be able to take the maximum possible premium at least once. After that, the contract continues to run but can be cancelled unilaterally.
How can consumers enforce their rights?
If the BGH issues a judgment in the model infringement lawsuits, this sets a general trend. Consumers must enforce their individual claims with their bank. "Sparkassen do not have to react immediately but can wait for individual lawsuits," says Michael Hummel, legal affairs manager at the Consumer Center Saxony. "I consider it unlikely that the institutions will wait it out, however, as there are numerous legal service providers ready to take up the consumers' claims."
Do claims expire at some point?
Anyone who has not joined a model lawsuit can request their bank to recalculate the interest on the savings contract based on existing BGH judgments. In the case of a cancelled contract, claims must be registered according to prevailing legal opinion within three years to prevent them from expiring. The Consumer Center Saxony is advocating for a ten-year limitation period in this matter.
- The People's Bank, along with other financial institutions, has been involved in a long-standing dispute over Premium savings contracts, which they sold in large numbers in the 1990s and early 2000s.
- Consumer protection organizations, including the Consumer advice center Saxony, are expecting the Federal Court of Justice in Karlsruhe to provide clarity on how interest should be calculated for these products.
- The Top seller Premium savings contract offers saver account holders an additional premium, in addition to the variable interest, with a tiered structure based on the contract term.
- The permanent dispute over these contracts' interest calculation has already been ruled on by the Federal Court of Justice (BGH) multiple times, including a 2004 decision that contract clauses allowing Sparkassen to lower interest rates were unlawful.
- The process (court) of determining how interest should be calculated for Premium savings contracts is currently ongoing at the Federal Court of Justice, with various calculation models being considered.
- The OLG (Higher Regional Courts) in Dresden, Naumburg, and others have issued judgments in mass proceedings regarding the interest calculation for Premium savings contracts, which are now under consideration by the BGH.
- Consumers who wish to enforce their rights in the event of a BGH judgment in a model infringement lawsuit must do so individually with their bank, as Sparkassen and other institutions may choose to wait for individual lawsuits before making changes.
