Germany: Changes to the banks' general terms and conditions

In banking practice, it had become established over a long period of time to inform customers of the intended changes to the GTC and, in the absence of an objection, to feign their consent. As a rule, the customer was given a period of eight weeks (two months) to object. The fictitious consent was already preserved in the corresponding GTC clause; moreover, the customer was expressly informed of the effect of the amendment.

This objection solution was rejected by the German Federal Court of Justice in April 2021: An au-tomatic consent to a change of contract by silence is not possible. Rather, such a change requires the active consent of the customer (we reported here).

In addition to an enormous effort for the banks to obtain the active consent of the customers, the decision also resulted in legal uncertainties. In many cases, it was unclear after the ruling which version of the GTC now applied to which customer. In any case, from the banks' point of view, it seems almost impossible to offer their services in the mass customer business unless there is a uniform contractual basis within their customer base.

What led to the verdict?

The judgement of the BGH is based on a lawsuit filed by the Federal Association of Consumer Organisations (Bundesverband der Verbraucherzentralen). The central starting point of the lawsuit was the question of whether § 675g of the German Civil Code (BGB), on which the banks based their fiction clause, applies to the entire business relationship between the bank and its customer, or only to an amendment of the payment service framework contract. While from the banks' point of view the provision clarified a general legal principle, from the BGH's point of view it was an ex-ceptional provision that could not apply to changes in the entire business relationship. Instead, such clauses had to be subjected to a comprehensive review of the general terms and conditions, which in the end led to a rejection of the fiction of consent.

The decision of the BGH was preceded by a ruling of the European Court of Justice (ECJ), the so-called DenizBank decision. In this ruling, the ECJ had measured a clause of DenizBank, which or-dered such a fictitious consent, against the relevant EU payment services law and confirmed the applicability of the law on general terms and conditions. The clause used by DenizBank was ap-proved in the result. On closer inspection, however, this conveyed only a supposed certainty, as the clause referred to the amendment of the payment services framework contract covered by Section 675g of the German Civil Code (BGB) anyway.

Consequently, the BGH subjected the clauses at issue to the GTC test and came to the conclusion that an amendment of the entire contractual structure is dependent on the active consent of the bank customers. This ruling was surprising in view of the decades-long use of such GTCs by banks and a large number of rulings on GTCs that had been amended by such clauses.

Consequences of the ruling

In the banking industry, the ruling caused unrest and uncertainty. Due to the annulment of the fiction clause - with the exception of those to which the clients had actively agreed - it was not only unclear which contract adjustments were valid. Furthermore, banks were confronted with the problem that their entire customer base could be riddled with inconsistent contracts. Ultimately, the ruling leads to a considerable additional effort for intended changes in the future: In addition to the obligation to obtain active consent for contract changes, there are extensive information and clarification obligations. This necessitates a fundamental change in the administration pro-cesses and significantly increases the costs of contract administration.

The ruling also caused uncertainty from the customers' point of view. It is true that the abandon-ment of the fictitious consent initially strengthened the rights of customers. But at second glance, it led to the sometimes unintended side effect of threatening to terminate the business relationship by those banks that could not continue to offer their services under the originally agreed condi-tions. Whether this represents an overall improvement for the customer may be doubted.

Currently, banks regularly limit consent fictions in their GTCs along the lines drawn by the judg-ment. Thus, a fiction may occur if the GTC amendment is made in order to implement mandatory requirements as a result of a change in the legal situation or to comply with a court or official or-der. Other changes to the GTC are expressly excluded from the fiction of consent.

Legislative proposal

In order to address these problems, the CDU and CSU parliamentary group has now drafted a proposal to amend § 675g of the German Civil Code (BGB). At present, it is not yet foreseeable when the proposal will be introduced in the Bundestag and accepted by it for decision. However, it can be expected to be introduced into the Bundestag in the near future.

In concrete terms, it essentially provides for two changes: On the one hand, amendments to the payment services framework contract are to be limited in such a way that essential amendments which fundamentally change the character of the contract are excluded. On the other hand, Section 675g of the German Civil Code (BGB) is to be expanded to include a paragraph ordering that a clause ordering a fictitious consent does not constitute an unreasonable disadvantage within the meaning of Section 307 of the German Civil Code (BGB) - i.e., the law on general terms and conditions.

Impact of the proposal

The proposal submitted takes up the points that led the BGH to reject the clauses at issue: a fictitious consent to the amendment of the contract, which affects the entire contractual relationship, leads to an unreasonable disadvantage for the bank’s customer, on whom a new contract is imposed without his or her intervention.

By limiting the power to amend to "insignificant" amendments that do not change the character of the contract and the legally mandated interpretation of the clause as "reasonable", the proposal aims at a comprehensive clarification of the situation that has arisen as a result of the ruling. Thus, the extension of the power to amend leads to the banks being able to continue the practice of ficti-tious consent by virtue of GTCs to a large extent without having to fear that such a clause will fail the GTC control in the future. However, this also has effects on the past: By means of the envis-aged power, banks can try to cure ineffective amendments from the past by asking their customers for consent and benefit from the now permissible fictitious consent. This should considerably ease the effort of banks to bring about a uniform and effective contract amendment with the entire customer base, since this - as in the past - does not depend on an active action of customers who are basically willing to give their consent.

Whether the proposal currently under discussion as a so-called "small solution" is sufficient to really make it easier for banks (and other companies) to adapt general terms and conditions (espe-cially since the changes are only to be made in the part of the German Civil Code dealing with pay-ment service framework contracts) remains to be seen. It might be worthwhile to propose a more far-reaching legal regulation here in order to avoid legal uncertainties.

Outlook

The extent to which the proposal will prevail in the form of an actual amendment to the law re-mains to be seen. First of all, it is necessary that the proposal is included in the agenda of a parlia-mentary session, during which the so-called first reading can take place. However, the further path of the proposal is unclear at this point and probably depends on whether and how great the resistance to the intended amendment is.

With the kind support of Manuel Traub, research assistant.