Obligation of banks to proactively inform about ineffective general terms and conditions (GTC) clauses regarding custody fees
By decision dated February 27, 2024 (File No.: 3 U 286/22), the Higher Regional Court of Frankfurt am Main clarified for the banking sector that credit institutions must actively inform affected customers if they can no longer rely on a general terms and conditions clause—such as for the introduction of a custody fee for balances on current or overnight deposit accounts—because this clause has been declared invalid. This ruling is of significant importance for the entire banking industry as well as for consumers who were impacted by so-called custody fees.
Initial situation: Custody fees and GTC clauses
For several years, banks and savings banks have increasingly been charging so-called custody fees for large account balances. The basis for this was often pre-formulated clauses in the institutions’ GTCs, intended to introduce such a fee regardless of individual agreements. The courts—most recently the Federal Court of Justice—have put a stop to this practice by determining that numerous such clauses violate §§ 305 and following of the German Civil Code (BGB) and must therefore be declared invalid.
Obligations of banks after declaration of invalidity
Necessity of individual communication
With the invalidity of a clause come particular duties of diligence and information on the part of credit institutions. The decision of the Higher Regional Court of Frankfurt am Main makes it clear that it is not sufficient to merely provide a reference to the changed legal situation at a central location—such as on the institution’s website. Rather, affected customers must be specifically and proactively informed about the invalidity of the relevant GTC provision and the resulting consequences.
Legal basis and consumer protection
This consumer-protective obligation arises from both EU and national requirements regarding the validity of general terms and conditions (in particular, Art. 6(1) of Directive 93/13/EEC as well as § 307 BGB). An institution’s conduct that leaves it up to consumers to independently find out whether a contract clause is still effective contradicts the purpose of these regulations. Banks must ensure that customers are no longer affected by clauses whose ineffectiveness has been determined by the courts.
Practical consequences for bank customers
Reversal of excess fee payments
This duty to inform particularly covers scenarios in which customers have already paid custody fees on the basis of ineffective provisions. Since an invalid GTC clause cannot form a legal basis for payments, in principle, there is the option to claim back wrongly paid fees under the provisions concerning unjust enrichment (§§ 812 et seq. BGB). A failure by the credit institution to inform may even lead to the suspension of the statute of limitations if customers only learn later of a clause’s invalidity.
Significance for institutions and contractual partners
The ruling provides banks and other credit institutions with clear instructions to adjust their information policies in line with changed or judicially challenged GTC content. Contractual partners—especially investors and savers—are granted a stronger legal position in ongoing contractual relationships, as well as regarding potential refund claims.
Assessment of the legal situation and implications for practice
Transparency and participation obligations
The decision from the Higher Regional Court of Frankfurt highlights the central role of contractual transparency in the mass business operations of credit institutions. In addition to legal certainty regarding the validity of contractual clauses, there is also an obligation to align existing customer relationships with current legal requirements. The duty to inform applies not only to future contractual arrangements but expressly also to existing contractual relationships.
Impact on risk management and compliance structures
For banks and other companies active in the capital markets, the requirements for proactive, customer-oriented information management have continued to increase. This not only raises the importance of continuously reviewing existing terms and conditions, but also the necessity of adapting communication and compliance processes accordingly.
Ongoing developments and case law
It should be noted that there are currently further proceedings pending on this topic. Case law remains in development. Future decisions—especially those from the Federal Court of Justice—are expected to further clarify the scope of information obligations and to define any possible courses of action for credit institutions. A final assessment is therefore reserved for the future direction of the courts’ decisions.
Conclusion and legal outlook
With its ruling, the Higher Regional Court of Frankfurt am Main has once again emphasized the importance of banks’ proactive duty to inform about invalid GTC clauses. Affected contracting parties—and in particular account holders—may find their rights strengthened, while financial institutions are required to adapt their internal and external communications in order to prevent legal risks.
For further questions regarding contractual terms, refund claims, or regulatory obligations in connection with invalid GTC clauses, the attorneys at MTR Legal are at your service for advice.
