Thursday, 8 December 2016

Rescheduling credit NOT free of charge if payment for credit recovery agency added - CJEU in VfK (C-127/15)

In July we've mentioned an opinion of AG Sharpston in Verein für Konsumenteninformation case (C-127/15), which concerned debt collection agencies and a possibility of them being recognised as credit intermediaries (Debt collection agencies as ... - in this post we present the facts of the case in details). Today the CJEU issued a judgment in this case.

The CJEU shared AG Sharpston's opinion that the credit rescheduling agreement concluded between consumers and Inko, acting as a credit collection agency on behalf of the lender, could not be recognised as a 'free of charge' agreement, if it obliged consumers to repay the total amount of the credit and to pay interests and costs that were not agreed on in the initial contract. The concept of a 'credit agreement' is broad and covers also agreements on rescheduling of repayments of existing debts (para 30), incl. when these are concluded by credit intermediaries acting on behalf of the lender (para 32). Since in the given case, consumers would be obliged to pay first Inko's costs, and then remaining capital due and interest, they had a new obligation placed on them, which was not agreed in the initial contract - to pay the costs of a credit recovery agency (para 38-39). Therefore, the credit rescheduling agreement could not be seen as concluded free of charge.

While the CJEU further agrees that debt collection agency, such as Inko, should be perceived as a 'credit intermediary' (under Art. 3(f) of the Consumer Credit Directive), it doesn't, however, share the view of AG Sharpston that this would place any pre-contractual information obligations on the agency. While credit intermediaries have a duty to inform, this obligation does not stretch to 'credit intermediaries in an ancillary capacity' pursuant to Art. 7 of the Consumer Credit Directive, and this category encompasses such persons who are not credit intermediaries as their main purpose of trade, business or profession (para 47). If the referring court then determines that Inko only acted as a credit intermediary in an ancillary capacity, they would not be found negligent in not providing pre-contractual information to consumers. However, in this case the lender would need to ensure that such information reaches consumers (para 52).

The last part of the judgment is somewhat disappointing, considering that when debt collection agencies contact consumers they won't have an obligation to provide pre-contractual credit information, as long as they would maintain debt collection as only part of their trade. Banks (lenders) might not always be immediately aware that such a contact has occurred, which might hinder their performance of duty to inform.

1 comment:

  1. With regard to the last paragraph, lender can impose on debt collection agency a contractual obligation to provide pre-contractual information or to inform the lender, thus making sure the informaton duty is alway fulfilled regardless of which of the parties (lender or the intermediary) is actually responsible.