Swiss Franc borrowers are turning to EU Court

The consumer associations are going to send the issue of loans in Swiss francs to the European Court, addressing a relevant request to the Supreme Court.

The decision, according to information from "K", was taken after the publication of the content of the decision of the Supreme Court which definitively closes in favor of the banks the issue of loans in Swiss currency. Following this development, consumer associations are going to ask the Supreme Court to address a preliminary question to the Court of Justice of the European Union (CJEU) in order to determine the scope of application of Directive 93/13. This is the directive concerning abusive clauses in professional and consumer contracts.

It is noted that only the court of a country has the right to refer a question to the CJEU at the request of a party, in this case the Supreme Court, which last week rejected the appeal of a borrower who argued that the term included in the loan contracts in Swiss currency, that is he has to repay the loan based on the current exchange rate, he is abusive.

Specifically, with decision 4/2019, the Supreme Court ruled that a specific term repeats a provision of the civil code and therefore cannot be checked as to its legality.

Consumer associations base their request on similar appeals to the European Court of Justice by borrowers and courts in other countries, such as Romania and Hungary, which have vindicated consumers. In particular, the request – if the Supreme Court sends it – will concern whether there was opacity in the general terms of transactions in Swiss franc loans and whether through them the consumer's right is violated, as defined by the European directive.

It should be noted that several governments of Central Europe and the Balkans have decided to allow the repayment of loans, instead of in Swiss francs in euros (Slovenia) or in another national currency, based on decisions not only of national courts but also of the CJEU, as well as an opinion of the ECB.

On September 20, 2017, the CJEU ruled that the banks should have respected two criteria: first, they should have clearly informed the borrowers about the risk of a change in the exchange rate, which could make it very difficult to service the loan. Second, the banks should have explained to the borrower what a possible change in the exchange rate will mean for him, especially when he has no income in the currency of the loan. In an opinion (in 2018) on the restructuring of the loans granted by the Slovenian banks, the ECB recognizes that in the case of conversion of loans in foreign currency there should be "a fair distribution of burdens among all interested parties, in order to avoid moral hazard in the future ».

The Swiss franc case concerns approximately 70,000 borrowers who have received loans with a nominal value of around 7 billion euros. It is recalled that Swiss franc loans had dominated the period 2006-2009, when the euro/Swiss exchange rate was on the rise, specifically between 1.55-1.65. In the past, borrowers were mainly favored by the low interest rate that the specific loans had due to low libor, which was close to 2%-2.5% compared to 5%-6% which was the average interest rate for euro loans. Today, the euro/Swiss franc exchange rate stands at 1.13, which means that borrowers need more euros to repay the loan in the Swiss currency and in addition libor (-0.71%) and euribor (-0, 30%) converge to a large extent, with the consequence that apart from the burden they suffer, due to the slide of the euro, they have a limited benefit from the cost of money.

source: kathimerini.gr