Variable loan interest rate – bank overcharges by around a quarter of a million

– Special bank for doctors and pharmacists agrees ineffective interest cap clause –


Numerous bank customers pay overdraft interest on their current account for years because their credit institution charges them too much interest on their loans.

Legal and calculation errors occur en masse at some institutions – and occasionally lead to the bank customer being driven into insolvency.


Variable interest as a cost trap

With an interest rate cap agreement, bank customers should be able to calculate better, because the interest rate should move within a fixed range.

However, the customer often cannot see from the text of the contract how the interest rate is calculated and when it changes, so that there is a violation of consumer credit law, which means that the interest rate agreement as a whole is invalid.


Retroactive only 4% interest for the bank

In such a case, the Regional Court of Duisburg (judgement of 01.12.2011, file no. 1 O 124/11) ordered the bank to repay overpaid interest, both in relation to bank loans and in relation to overdraft interest on the current account. Then there was also the fee for the cap agreement, i.e. an interest rate cap, as well as the borrower’s investment loss, because he could have invested the overpaid money himself or repaid his loan to a greater extent.


No audit by accountants and tax advisors

The usual accounting programs do not include an option to check the correctness of fee and interest statements of credit institutions. You can now check for yourself whether an account has been settled correctly using inexpensive software. One software provider advertises a “100% money back guarantee” because accurate accounts are supposed to be the exception: “We’re so sure your accounts are affected, too, that we’ll give you a 100% money back guarantee if your bank account has been accurate for a period of at least three years.”


No statute of limitations

Pharmacists and doctors are not the only ones who usually do not have the loan statements of credit institutions checked by experts, which usually does not constitute gross negligence. Therefore, those affected can still regularly reclaim overpayments of the last 10 years from their bank. Significant indications for a review are missing information in the loan agreement on the question when the interest rates will be adjusted and to what extent.

Even if the interest rate is not limited by a cap agreement, it often happens with variable-rate loans that interest rate increases on the capital market are quickly passed on to the borrower, but the interest rate reductions do not become noticeable to the borrower, or only much later. After consulting a specialist, some of those affected are surprised to find that they still have claims against their bank for incorrect accounting to the extent of several years’ profits.


But even in the case of life insurance, some insurance boards have a hard time correcting incorrect calculations of policies. For example, Calamitas-Lebensversicherung AG (part of a German insurance group, ergo it needs a name of some kind) agreed significantly lower cost rates in its applications with Riester customers than it then actually charged – the disadvantage per customer added up to several thousand euros over the total term. Sales staff pointed this out, and a few isolated cases were also corrected. Years later, the matter came to light – and now under pressure, the company found itself in a position to subsequently reduce the cost rates for thousands of customers as agreed. It is hard to believe that these responsible board members were not previously aware of, and did not cover, the miscalculations.


Sometimes it depends on which county court district the client lives in. Under Board policy, customers in a district court district where the insurer has previously lost a lawsuit are treated correctly according to the judgment, but not in all others. Such specifications bring the insurer millions in each case. Also BGH judgements are occasionally simply ignored by banks and insurers, if they would come too expensively – allegedly it was then a not transferable individual case.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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