Interest plus premium - Premium savings contracts: BGH confirms standard for interest rate adjustment
For years, consumer protection organizations have been suing Sparkassen and Volksbanken in court over missed payments due to invalid interest rate clauses in savings plans. The Federal Court of Justice (BGH) has now, for the first time, confirmed a benchmark interest rate for the recalculation of interest. Specifically, this concerned two decisions of the Higher Regional Courts in Naumburg and Dresden, which had set the interest calculation based on the yield rate of marketable federal bonds trading on the stock exchange with a remaining term of 8 to 15 years. The benchmark interest rate passed the review of the BGH, according to the Senate.
In savings plans, savers receive additional to the variable interest a usually tiered bonus. The longer regular savings contributions are made, the higher the bonus falls. Such savings plans were sold in the 1990s and early 2000s, especially by Sparkassen ("Savings for the Future," "Wealth Planning"), but also by Volks- and Raiffeisenbanks ("Bonus Plan," "VRZ Future").
Money back - but how much?
Many of these contracts contain clauses that give banks the unilateral right to change the guaranteed interest at their discretion. The bank could adjust the interest rate to its own advantage, i.e., lower it. The BGH had already declared this unlawful 20 years ago. However, it was unclear until now how the interest for these products should be calculated instead.
The consumer protection organizations wanted to change that. Since the benchmark interest rate set by the Higher Regional Courts did not suffice for them, they filed a revision against these decisions. They wanted the Federal Court of Justice to instead determine that the interest should be calculated based on the average yield of government-backed mortgage-backed securities with a guaranteed term of 10 years. They also demanded sliding average values. The Eleventh Civil Senate in Karlsruhe did not find any reason to criticize the benchmark interest rate referred to by the Higher Regional Courts. The President of the Senate, Judge Jürgen Ellenberger, explained that the yield rate of marketable federal government bonds trading on the stock exchange with a remaining term of 8 to 15 years was in line with the requirements for benchmark interest rates. The interest rate benefited neither savers nor the accused Sparkassen. It also reflected the current interest rates on the risky capital market.
Consumer protection organizations appeal to Sparkassen
Despite the rejected revision, consumer protection organizations expressed a positive attitude towards the judgment. "The Federal Court of Justice has set a standard for how Sparkassen must recalculate incorrectly calculated contracts," commented the managing director of the Federal Consumer Protection Association, Ramona Pop. "Now the Sparkassen must take action and issue compensation."
The judgment is binding in a legal sense only for the two accused Sparkassen. However, since these are standard products of Sparkassen, the rulings of the Federal Court of Justice from the perspective of consumer protection organizations could also apply to premium savings plans of other Sparkassen. The Federal Court of Justice left open whether other benchmark interest rates could also be considered for interest adjustments.
- The German Federal Court of Justice (BGH) recently confirmed a benchmark interest rate for Sparkassen and Volksbanken in relation to missed payments due to invalid interest rate clauses in savings plans, with cases in Naumburg and Dresden serving as examples.
- In the 1990s and early 2000s, these questionable savings plans were widely sold by German savings banks (Sparkassen) and Volks- and Raiffeisenbanks, with popular products including "Savings for the Future," "Wealth Planning," and "Bonus Plan."
- The BGH had previously ruled that banks could not unilaterally lower guaranteed interest rates, but there was no clear agreement on how to calculate interest for such savings plans without the invalid clauses.
- Consumer protection organizations opposed the lower benchmark interest rate set by the Higher Regional Courts and filed an appeal with the Federal Court of Justice in Karlsruhe, advocating for the use of average yield rates from government-backed mortgage-backed securities with 10-year guaranteed terms.
- The Eleventh Civil Senate in Karlsruhe determined that the benchmark interest rate referred to by the Higher Regional Courts was appropriate, aligning with current interest rates on risky capital markets and not favoring either savers or the accused Sparkassen.
- People's Bank in Naumburg and Dresden's Volksbank were the main parties targeted by the consumer protection organizations in this court case; however, the ruling could potentially impact other premium savings plans sold by various Sparkassen across Germany.
- Despite the rejected revision, consumer advocacy groups welcomed the judgment, hoping it would lead to quick action from Sparkassen in correcting and compensating affected savers.
