Financial institutions refuse to honor accrued interest: Consumer activists concerned - actions you can take
In a development that has raised alarm among consumer protection advocates, German banks are refusing to pay interest on premium savings contracts following a July 2024 ruling by the Federal Court of Justice (BGH). The ruling clarified that banks are not obligated to credit interest on these contracts under certain conditions, leading to banks withholding such payments.
The BGH ruling from July 2024 addressed the terms under which premium savings contracts accrue interest, effectively limiting banks' obligations to pay interest if the contracts' conditions or calculations are deemed unfavorable or unclear. This has caused some banks to refuse interest payments on what were previously considered interest-bearing contracts.
Consumer protection groups have protested this interpretation by the banks and are working to inform consumers about their rights, as well as urging legal reforms or enforcement actions to ensure fair treatment of savers. The July 2024 BGH ruling established a reference interest rate for the recalculation of premium savings contracts, but financial institutions, including savings banks, are reportedly delaying payments to their customers regarding these contracts.
The issue of delayed payments persists, despite the BGH ruling being a year old. The Consumer Association reports that many financial institutions, including savings banks, are not complying with the obligation to pay interest as set out in the ruling. This non-compliance has led to concerns that delayed payments could potentially let claims expire and become unenforceable.
The Federal Supervisory Authority BaFin attempted to issue a general decree, but it was not legally enforceable. The BGH ruling from July 2024 demonstrates the correct calculation of interest for premium savings contracts, and consumer advocates are likely engaged in legal challenges and awareness campaigns to counter banks' refusal to pay promised interest, reflecting a dynamic legal environment in German financial services.
From 1990 to 2005, many people chose premium savings contracts with variable interest rates. As the situation unfolds, both banks and consumer groups will continue to monitor any further legal challenges or policy changes that may occur. For now, consumers are advised to seek clarification from their banks regarding the interest payments on their premium savings contracts and to consider seeking legal advice if they believe they are owed money.
The BGH ruling from July 2024 concluded that banks' obligations to pay interest on certain conditions for premium savings contracts can be limited, causing some financial institutions to halt interest payments on previously interest-bearing contracts. Consumer protection groups are working to inform consumers about their rights, urging legal reforms or enforcement actions to ensure fair treatment of savers, as delayed payments could potentially render claims expired and unenforceable.
