Cluj Attorney – Abusive Clauses ING BANK: Finding the Abusive Nature of the Variable Interest Rate and the Loan Origination Fee

Case Study – Abusive Clauses in a 2007 Personal Loan Contract with ING BANK N.V.

Objectives Achieved

The court found that the clauses regulating the interest rate and the origination fee in a personal loan contract were abusive. Consequently, the court ordered the bank to refund:

• The amount of 660 lei charged as a single origination/approval commission;
• The amounts charged as interest exceeding what could be legally collected, namely interest in excess of:
  1. For the period from contract execution until 01.07.2010: 13% per annum;
  2. From 01.07.2010 to the end of the contractual period: reference rate (via 3-month internal financing rate) plus a fixed margin of 6% per year;
• In addition, the bank was ordered to pay legal penal interest on each refunded sum, from the moment of original collection until repayment.

Case Presentation

In 2007, the plaintiff concluded a personal needs loan contract with ING BANK N.V. in the amount of 33,000 lei, with a 10-year term. The loan was fully repaid by 2016.

Under the terms of the contract, for the first three installments the interest rate was fixed: reference rate of 7% + fixed margin of 6%, resulting in a fixed interest rate of 13%. After these first three payments, the interest rate became variable, meaning it would be formed from the bank’s internal 3-month financing rate plus a fixed margin of 6%. These variable interest formulas are contained in Annexes 1 and 2 to the contract, which are integral parts of it.

Annex 2’s Article 1 provides that the Annual Equivalent Rate (DAE) may change whenever one of the cost elements changes, including by unilateral modification of the interest rate by ING BANK under the conditions in Article 10.

Article 10 of Annex 2 states that ING BANK may modify the interest rate or penal interest if the reference rate rises by at least 1.5%. Article 3 of Annex 2 defines the reference rate as ING BANK’s internal 3-month funding rate.

The contract also includes clauses on communication: pursuant to Article 6(2) of Annex 1, the bank may display each interest rate change at its offices, no later than the date the new rate is applied. The borrower agrees that this method is sufficient and waives claims regarding inadequate notification.

Legal and Court Reasoning

The court held that—

• After the first three installments, the interest is variable (reference rate + fixed margin). But the contract wording does not clarify the criteria by which the reference rate varies. The bank only defines it generically as “internal financing rate for 3-month funds,” without specifying objective rules or fixed parameters. Such vagueness prevents a consumer, even diligent, from forecasting their future payments.
• The clauses defining the reference rate are non-transparent, unclear, and unintelligible, because from reading them alone one cannot determine objectively the criteria for variation.
• The combination of clauses (Annex 1’s Article 6(2) along with Articles 3 and 6 in Annex 2) gives the bank the power to change the reference rate in unpredictable fashion, to the consumer’s significant disadvantage. This unbounded unilateral modification power is incompatible with good faith and constitutes an abusive clause (see letter l of Annex to Law 193/2000) which prohibits clauses that limit the consumer’s legal remedies.
• Therefore, the court declared the clause in Annex 2 Article 3—defining the reference rate formula—as absolutely null.
• As to interest after 01.07.2010, the bank switched to a new formula: COBOR/ROBOR 3-month + fixed margin of 6%, plus a fixed 1.25% component. The court found that aligning to the legal framework post-2010 was valid but the 1.25% fixed component was new and not legally mandated and thus required an additional signed addendum; lacking that, it was null under OUG 50/2010 art. 40(3).
• Consequently, the sums collected via the null 1.25% clause must be refunded.

Conclusions

• From 01.07.2010 onwards, the court fixed the interest formula as ROBOR 3-month + margin 6% (transparent, objective).
• Before that date, the interest remains the original 13% (7% + 6%) agreed by the parties—that part is not nullified.
• The court ordered restitution of all amounts collected under the declared-abusive clauses.
• Because the declared-abusive clauses are deemed never to have existed (retroactive effect), the contract remains valid but under the legally correct interest formula.