No compensation for use in the event of revocation of a loan agreement concluded at a distance

In 2005, the plaintiff, as a consumer, concluded two loan agreements at a distance with the to finance two condominiums. In 2015, he declared the revocation of these contracts to the bank. He claimed that the information on revocation provided to him when the contract was concluded had been incorrect. Since the bank did not recognize that the plaintiff had effectively revoked the contracts in question, the plaintiff brought an action before the Bonn Regional Court for a declaration that his revocation was effective and for an order that the bank pay compensation for use on the interest that he had paid to the bank until the revocation. In the opinion of the Regional Court, the plaintiff was able to effectively revoke the contracts because the revocation instruction was incorrect. As far as the consequences of the revocation are concerned, the Regional Court points out that under German law the borrower is obliged to return the disbursed loan to the lender and to surrender the benefits derived therefrom. In principle, these amounted to the interest provided for in the contract concluded by the parties. For its part, the lender is obliged not only to return the amounts received to the borrower, but also to pay compensation for the use thereof. However, according to the Regional Court, it is not in line with Directive 2002/65 on the distance marketing of consumer financial services (Art. 7) that the borrower can claim compensation for use from the lender. It therefore asked the ECJ to interpret the directive.

The ECJ answered the LG Bonn as follows:

– Art. 7 par. Article 4 of Directive 2002/65/EC of the European Parliament and of the Council of 23 September 2002 concerning the distance marketing of consumer financial services and amending Council Directive 90/619/EEC and Directives 97/7/EC and 98/27/EC must be interpreted as meaning that a consumer who exercises his right of cancellation in respect of a loan agreement concluded at a distance with a supplier must be reimbursed by the supplier, subject to the amounts which he himself may have paid under the conditions laid down in Article 7(1) of that directive. 1 and 3 of this Directive, may claim reimbursement of the principal and interest amounts paid to fulfill the contract, but not compensation for use of these amounts.

According to the ECJ, if the consumer pays the loan principal plus interest to the provider to fulfill the loan agreement, the provider must reimburse both the repayment amounts and the loan interest to the consumer in the event of revocation. On the other hand, the directive, which in principle brings about full harmonization of the aspects it regulates, does not provide that, if the consumer revokes the contract concluded with him, the supplier would be obliged, in addition to reimbursing the consumer for the repayment of principal and interest paid by him, also to pay the consumer compensation for use of the sums received in the course of performance of the contract.