Friday, 29 March 2019

If it looks like withdrawal, it quacks like withdrawal... it may still be financial services. AG Pitruzzella in Romano

Yesterday, AG Pitruzzella published his opinion in Romano v DSL, a case concerning a somewhat less well-known instalment in EU consumer protection: Directive 2002/65/EC. The concrete issues discussed in the case, however, are quite similar to typical consumer cases: they have to do with withdrawal rights and information provision. 
In 2007, the Romanos entered a distance consumer credit contract. They signed a form acknowledging that demanding immediate performance of the credit meant that they were forsaking their right of withdrawal. For more or less ten years, they went on paying back the credit, until they decided to sue the bank arguing that the contract should be terminated: they had not been provided appropriate information on their withdrawal rights, and hence should not be held to the contract. Additionally, as provided by German law, the creditor should pay them compensation for having all the while retained use of their money. 
The right of withdrawal in distance consumer credit contracts, as featured in the Directive, appeared to have been implemented in the various sub-provisions going under article 312 of the German Civil Code, or BGB. These excluded withdrawal from already performed financial contracts, when performance had taken place at the express requests of the consumers before their withdrawal period expired. However, it appears to be the case that the German Supreme Court had affirmed that the consumer’s right of withdrawal in distance financial services was still regulated by article 355 (and 495) of the BGB, where the general provisions on withdrawal in consumer contracts find their place. This meant that the contract’s performance did not exclude the right of withdrawal when consumers had not been properly informed.
The referring court asked, in essence:
1)   Whether it was precluded, under the Directive, to regulate the right of withdrawal in the field covered by it in a way different than what established by Article 6(2)(c) of the directive itself; 
2)   Whether the information to be given under the Directive and concerning the right of withdrawal must be aimed at the “average consumer” as defined by CJEU case-law, or whether the directive allows for a different consumer image. 
As to the first question, the AG answers in the affirmative: the Directive must be understood as pursuing full harmonisation except when expressly providing otherwise.  A clause allowing for additional protection at MS level had been included with regard to information provision, but not to withdrawal rights. The fact that in this case the two issues were to an extent interrelated – the right of withdrawal being extended as a result of (allegedly) insufficient information provision – did not lead to a different conclusion, because the Directive (we must understand: intentionally) did not attach any consequences to the provision of insufficient information on the right of withdrawal. It only said that the withdrawal period only started running once the consumers were informed of their right. 
As to the second question, the AG engages in a sort of systematic interpretation, explaining that since the definition of “consumer” in Directive 2002/65 was essentially the same as the ones found in Directive 93/13 and 2005/29, and the Court of Justice has already clarified that the average consumer standard applies to both of those directives, the same consumer notion – postulating a reasonable, informed and circumspect consumer – should apply here. It is such a consumer, thus, that should be kept in mind when ascertaining whether sufficient information has been provided in the context of the Directive. In this case, the AG does not engage in a discussion concerning minimum and maximum harmonisation – likely because providing “additional protection” under the Directive is an activity that would only be open to national legislatures and is precluded to civil courts adjudicating on specific cases. 
The AG also answers the third question – which would fall if the court followed him on the first two points: can a member state require providers of financial services to pay the withdrawing consumers compensation for the availability of the consumers’ money between the contract’s conclusion/performance and the time of withdrawal? According to the AG, member states cannot introduce such a requirement: the Directive’s article 7 regulates exhaustively the consequences of withdrawal, without providing for such additional compensation. In light of the system of the Directive, which gives consumers two weeks to exercise their right of withdrawal, such additional compensation would make little sense. 

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The opinion contains some possibly controversial passages – such as the assumption that lending “imperialist” force to the average consumer standard is just a matter-of-fact operation – but does not come across as particularly surprising. Perhaps its most remarkable feature is to remind us of the complications arising from the EU’s resolve to treat consumer financial services as a field of its own, requiring national legislators and courts to fragment otherwise rather indistinguishable situations in accordance with the Union’s rather arbitrary legislative boundaries. Have a nice weekend!

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