Consumer Rights Win
The Law
A bank which grants a consumer loan without adhering to all the formal requirements prescribed by law can lose the right to claim interest.
The Facts
My client, a private individual, was being sued by his bank for the sum of €28,000.
The bank granted him a loan for the purchase of a vehicle. The bank financed the purchase of the vehicle up to €64,000, repayable in 60 monthly installments of €1,422.
The bank claimed that my client stopped honoring the rental payments; that his multiple reminders were unsuccessful; and that he then issued a formal demand for the payment of the overdue contractual installments, amounting to €8,000.
The bank further maintained that since his formal demands were ineffective, he had no choice but to declare the loan term expired.
He took the matter to court, seeking to have my client ordered to pay the sum of €28,000 and €1,000 in lawyer’s fees.
In response to the bank’s claim, my client put forward his argument. As follows:
We do not dispute the debt, but we raised issues regarding the bank’s procedures.
In particular, we highlighted that the bank had not provided the European pre-contractual information sheet required by law. We argued that this meant the bank had forfeited its right to claim interest.
In reply, the bank presented its defence. It argued that my client was fully informed of all the details of the financing contract. Moreover, he had never expressed an intention to return the financed vehicle.
The Judgement
In light of these arguments, the judge ruled as follows:
“According to the provisions of Article L312-12 of the Consumer Code, prior to the conclusion of the credit contract, the lender or the credit intermediary must provide the borrower, in the form of an information sheet, on paper or another durable medium, with the necessary information to compare different offers and enable the borrower, taking into account their preferences, to clearly understand the extent of their commitment…
It is the responsibility of the lender to prove that they have fulfilled their pre-contractual obligations, and that the borrower’s signature on an explanatory sheet and the preliminary credit offer, each containing a clause in which the borrower acknowledges receiving the standardized European pre-contractual information sheet and the insurance notice, is merely an indication that the lender must corroborate with one or more additional pieces of evidence. Failing that, the lender’s right to claim interest will be forfeited.
In this case, the bank admits it was unable to provide the European pre-contractual information sheet, and as a result, the lender’s right to claim interest is forfeited.”
The Outcome
The court ruled that the sums paid as interest would only be applied to the remaining capital owed. Result: Instead of having to pay the hefty sum of €28,000, our client will only have to pay €8,506. A saving of €19,494. Quite a result!
Needless to say, when the judgment was announced, my client was beaming with joy and very grateful!
