Table of Contents:
1. Is the lender required to include unfair contract terms in the APR?
2. How can credit-related fees change?
3. Does the severity of a breach of the information obligation matter for the application of the free credit sanction?
Is the lender required to include unfair contract terms in the APR?
In today’s ruling, C-472/23, the Court once again emphasized the importance of the lender’s information obligation regarding the correct indication of the APR. The Court highlighted that this element of the credit agreement is crucial for consumers, stressing that the obligation to indicate the correct APR is not limited to prohibiting its understatement. A breach of the obligation set out in Article 10(2)(g) of Directive 2008/48 may also occur if the lender provides an inflated APR.
According to the CJEU, when calculating the APR in accordance with the mathematical formula set out in Part I of Annex I to Directive 2008/48, the lender must take into account the total cost of credit borne by the consumer in the form stipulated by the contract, even if certain contractual terms ultimately prove to be unfair and are deemed non-binding on the consumer.
This means that the lender’s obligation when calculating the APR includes factoring in the portion of interest charged on the financed commission.
How can credit-related fees change?
In response to the second preliminary question, the Court stated that consumers should be transparently informed about the reasons and methods for changes in fees related to their credit agreements so that they can assess the financial implications of the contract at the time of its conclusion.
The Court left the final decision to the national court regarding whether the method of informing consumers about fee changes, as set out in the agreement underlying the preliminary question, meets the requirements of Article 10(2)(k) of Directive 2008/48. The agreement specified that fees and commissions could change in response to circumstances such as variations in the minimum wage and indices published by the Polish Central Statistical Office (GUS), including inflation, average monthly earnings, energy prices, or interest rates set by the National Bank of Poland. It also stipulated that fee increases would not exceed 200% of the current fee and could be adjusted no more than once per quarter, with changes taking effect no later than six months after the occurrence of a justifying circumstance.
The Court provided guidance to the national court, noting that the criteria for fee changes were based on indicators that an average consumer would find difficult to verify both before entering into the contract and during its performance. According to the Court, the lender’s introduction of quantitative and percentage limits on fee increases does not alter this assessment.
Does the severity of a breach of the information obligation matter for the application of the free credit sanction?
The purpose of the third preliminary question was to determine whether a uniform and identical sanction should apply to any breach of the information obligation, regardless of the severity of the breach in a given credit agreement.
In response, the Court held that national law may provide for a uniform sanction for breaches of the information obligation, regardless of their severity, as long as such a breach could undermine the consumer’s ability to assess the extent of their financial commitment. In other words, the CJEU found that national law does not have to impose a graduated system of sanctions under Article 23 of Directive 2008/48 based on the severity of the breach.
