Czech banking institutions, most of whom still observe the unpopular practice of charging fees for managing loan and mortgage accounts, can breathe a sigh of relief. In a closely watched case the Constitutional Court on Tuesday ruled that the practice of charging such fees is not illegal, dashing the hopes of tens of thousands of people who have signed up to class actions to try and get their money back.
You could have heard a pin drop in the packed courtroom at the Constitutional Court in Brno as the judge read out a verdict that is expected to set a precedent for thousands of similar cases waiting to be decided by lower-order courts. The claimant demanded a fairly insignificant sum – the return of 7,200 crowns that she paid the bank in fees on a credit loan over a period of several years. Česká Spořitelna, the largest bank in the country, charged her 150 crowns a month for credit management, which the woman’s lawyer claimed was unsubstantiated enrichment since it was not clear what services if any the woman was getting for her money.
However the sum at stake was far more than the said 7,200 crowns. In the past year 300,000 clients have filed complaints against banking institutions charging clients for managing loan and mortgage accounts. These actions were encouraged by a 2011 verdict by the German Supreme Court which ruled that such fees were illegal and an isolated case in the Czech Republic which went in the client’s favour. In the majority of cases where Czech courts have already issued verdicts the ruling has gone in the banks’ favour, but a ruling by the Constitutional Court could have reopened many of these cases and cost Czech banks hundreds of millions of crowns.
However that scenario is not likely to evolve. The constitutional court judge ruled against the claimant, arguing that she had signed the contract of her own free will, knowing the conditions stipulated and that the bank’s policy had not in any way violated her rights as a client. He said the court could only intervene if one party in a contract were to unilaterally determine contractual conditions which the other party would be obliged to accept –which was not the case in question. The claimant’s lawyer Petr Toman said he was disappointed by the verdict.
“It was clear from the outset that this would be a big legal battle. You can see from similar rulings by German and British courts that there are two tendencies in Europe – one defends the interests of the consumer, the other is based on what we call autonomous will. We hoped that the Czech Constitutional Court would defend consumers and give them better protection. This did not happen and all I can say is that we did what we could.”
The verdict, which is to be published online in full detail, should serve as a guideline for lower-order courts deciding on similar cases. Clients who have in the past paid thousands of crowns in bank fees for such services now appear to have a scant chance of getting their money back and those preparing to sign such contracts will have to consider whether this is a deal they want to accept. Because despite the fact that past rulings have gone in their favour and the fact that the Constitutional Court verdict will hold back the tide of complaints that had been growing in recent months, some banks have finally moved to scrap the fees which raise the ire of thousands of clients.