Another interesting case tackled by the CJEU was C-76/22 QI v Santander Bank Polska S.A., focusing on Directive 2014/17/EC on Mortgage Credit (MCD) and the rules on the calculation of the reduction of the total cost of credit in case of early repayment. Although the judgment was delivered almost two years ago, it remains relevant as one of the few cases interpreting the MCD, and there has been no other case on the matter.
The consumer entered into a 36-month mortgage loan with the bank. However, the consumer fully repaid the loan within 19 months. At the time of granting the loan, the consumer paid a 2.5% commission on the amount borrowed, which was included in the total cost of credit. After full repayment, the consumer requested a refund of the portion of the commission paid corresponding to the remaining loan period (the period after full repayment).
The bank claimed that the commission for granting the mortgage was a one-off payment and was therefore excluded from the obligation of refund, but even if it would be refundable, reimbursement should not be proportionate to the period covered by the early repayment in relation to the repayment duration initially agreed, but should be proportionate to the profit expected by the creditor.
Under scrutiny was Article 25(1) of MCD, according to which '[m]ember States shall ensure that the consumer has a right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement. In such cases, the consumer shall be entitled to a reduction in the total cost of the credit to the consumer, such reduction consisting of the interest and the costs for the remaining duration of the contract.
The CJEU was first asked to answer whether the one-off commission falls within the category of costs considered when calculating the reduction in the total cost of the mortgage credit. In answering the question, the decisive point for the CJEU was whether charges are regular payments and whether the amount of (one-off) payments is objectively linked to the duration of the contract. However, as the bank did not provide the relevant information to be able to answer the question, the CJEU reformulated the first legal question to: whether Article 25(1) MCD must be interpreted as meaning that, in the absence of information provided by the creditor enabling a national court to ascertain whether a commission charged when concluding a mortgage agreement falls within the category of costs that are independent of the duration of that agreement, that court must consider that such a commission is covered by the right to a reduction in the total cost of the credit referred to in that provision.
The CJEU noted that national courts must satify themselves that the costs imporsed by the consumer, irrespective of the duration of the credit agreement, do not objectively constitute remuneration of the creditor for temporary use of the capital which is the subject matter of that agreement or for services which, at the time of early repayment, had not yet been provided to the consumer (para. 33). Therefore, a national court cannot presume, solely on the basis that a charge was paid by the consumer in a single instalment when concluding the mortgage agreement, that that charge falls within the costs that are independent of the duration of the agreement, which therefore cannot result in a reduction in the total cost of the credit referred to in Article 25(1) (para. 34).
The CJEU ruled that in the absence of sufficient information, whether the costs are objectively linked to the duration of the contract or whether those costs are independent of that duration, and to ensure that the consumer is not adversely affected by that absence of information, the national court is required to find that the costs concerned are not independent of the duration of the contract and are, consequently, covered by the right to a reduction in the total cost of credit in Article 25(1) MCD, even if the costs were paid in a single instalment when the agreement was concluded.
By the second question, the CJEU was asked whether Article 25(1) requires a specific methodology for calculating the reduction in the total cost of credit.
The CJEU noted that there is nothing in the wording of the provision that would suggest that, and reiterated the purpose of Article 25(1), which guarantees that Member States will provide for the consumer's right to discharge fully or partially his or her obligations under a credit agreement prior to the expiry of that agreement. Secondly, in the event of early repayment, the consumer is entitled to a reduction in the total cost of the credit, which consists of the interest and the costs for the remaining duration of the contract. In this regard, Member States enjoy discretion, provided that the chosen methodology ensures a high level of consumer protection.
The CJEU therefore ruled that there is no specific methodology for calculating the amount of the reduction in the total cost of credit referred to in Article 25(1).
This is an important judgment that sheds light on the way that the reduction in the total cost of credit in the event of early repayment should be calculated. It is also a warning to banks to be transparent about how their costs are calculated when communicating with all stakeholders, including courts. An interesting comparative point can be added: Article 29(1) of Directive 2023/2225 on Consumer Credit (CCD2) contains a similar provision that, in a way, seems to clarify the vagueness of the MCD and support the CJEU's position. According to Article 29(1) of CCD2, early repayment entitles consumers to a reduction in the total cost of the credit for the remaining duration of the contract. When calculating that reduction, all the costs imposed on the consumer by the creditor shall be taken into consideration. The CCD2, therefore, refers to all costs, including all fees and commissions, regardless of how and when they were payable.
