On 13 February 2025, the Court of Justice of the European Union (the "CJEU") delivered a preliminary ruling in the case C-472/23 in the names Lexitor sp. z o.o. v A. B.S.A, clarifying certain scenarios where lenders may be deemed to be in breach of their obligations to provide consumers with the information set out in Article 10(2)(g) and Article 10(2)(k) of Directive 2008/48/EC (the "Consumer Credit Directive" or the "CCD").

It is worth noting that, on 9 October 2023, the European Council adopted a revised Consumer Credit Directive ("CCD II") which forms part of the European Commission's 'New Consumer Agenda' and which supersedes the CCD. Member States have until 20 November 2025 to transpose CCD II, with the relative national measures to apply from 20 November 2026. Nevertheless, the principles elucidated in this judgement will continue to be pertinent for creditors even after the coming into force of CCD II.

Legal Background

The CCD, in force since 2008, was introduced by the European legislator to protect consumers when purchasing consumer lending products such as personal loans, overdrafts, credit cards and short-term credit products. Amongst others, to achieve this goal, the CCD outlines the essential information which must necessarily be disclosed by lenders before they enter into consumer credit agreements. This ensures that consumers are well-informed about costs and conditions before they enter into such agreements and allows them to compare offers by different lenders. In addition, the CCD then stipulates the information which needs to be included in the agreement itself, whether this takes the form of a letter of sanction or terms and conditions.

In particular, apart from the borrowing rate itself, both the pre-contractual information and the consumer credit agreement must clearly and concisely specify the annual percentage rate of charge (the "APRC") and the total amount payable by the consumer calculated at the time the credit agreement is concluded, along with all assumptions used to calculate the APRC. The APRC is the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit. In terms of costs, it therefore incorporates interest, commissions, taxes, and other charges known to the creditor and which are payable by the consumer in connection with the credit. Given that the CCD harmonises the manner in which such APRC is to be calculated, this percentage figure facilitates easy comparison between different credit offers.

Asides from the APRC, and amongst other information requirements, the CCD also requires that, where applicable, the consumer credit agreement sets out any other charges deriving from the credit agreement and the conditions under which those charges may be changed.

The CCD also obliges Member States to lay down rules on the applicable penalties for infringements of the national provisions adopted pursuant to the CCD, and stipulates that such penalties must be effective, proportionate and dissuasive.

Facts of the Case

The case involved Lexitor sp. z.o.o. ("Lexitor"), a Polish debt-collection agency, which had been assigned the rights of a consumer who entered into a consumer credit agreement (the "Agreement") with a Polish bank, A.B.S.A (the "Bank"). The Agreement stipulated a credit amount of 40,000 Polish Zlotys (approximately EUR 9,050) with an APRC of 11.18%.

The Agreement also set out that certain charges and commissions could be increased by the Bank upon the occurrence of one of the conditions listed in the Agreement, such as changes in the minimum wage, change in the level of inflation, changes in the price of energy, as well as a myriad of other conditions, in so far as those changes would affect the costs incurred by the Bank when performing the Agreement. The Agreement allowed the Bank to modify charges up to four times a year, with a maximum increase of 200%. However, the consumer had no clear means to verify whether the conditions triggering such increases had occurred.

Moreover, it emerged that when calculating interest, the Bank included not only the credit amount extended to the consumer but also additional credit-related costs. It appeared that had the interest been calculated solely on the amount of the credit extended, the APRC would have been lower than stated in the Agreement. Lexitor argued that the Bank's method of calculating the APRC was unlawful, as it resulted in an artificially high percentage that did not reflect the actual cost of credit. Accordingly, the referring court had to consider whether the inclusion of interest on costs beyond the principal loan amount constituted an unfair term under Directive 93/13/EEC (the "Unfair Terms Directive"). If deemed unfair, the provision would be non-binding on the consumer, which in turn would render the APRC inaccurate. The court sought guidance from the CJEU on whether such inaccuracies would then constitute a breach of Article 10(2)(g).

It was also claimed that the Agreement violated Article 10(2)(k) because it merely listed conditions under which charges could increase, without allowing the consumer to verify whether such conditions had been met.

Lexitor argued that such failures by the Bank should trigger the Polish law provision which states that where a lender breaches, amongst others, the abovementioned obligations, the lender forfeits his right to collect interests and other charges from the consumer.

Questions referred to the CJEU

The referring court referred three key questions to the CJEU. First, it asked whether an APRC that is overstated due to the inclusion of a contract term which is later deemed to be unfair and thus non-binding, could be considered to be a breach of Article 10(2)(g). The CJEU clarified that Article 10(2)(g) requires the APRC to be calculated at the time when the credit agreement is concluded, based on the assumption that both the lender and consumer will fulfil their obligations. Therefore, if certain contract terms are later deemed unfair and unenforceable, the initial APRC calculation does not necessarily violate this CCD requirement. In this scenario, the mere presence of an overstated APRC does not automatically constitute non-compliance with Article 10(2)(g).

The second question concerned Article 10(2)(k) and whether a general listing of conditions for increasing charges, without clear mechanisms for verification, satisfies the CCD's transparency requirements. The CJEU emphasized that information provided under Article 10(2)(k) must be clear and precise, enabling consumers to determine under what circumstances charges may change. In this case, from the information provided by the referring court it appeared that the conditions for charge adjustments were based on economic indicators that were complex, difficult to verify, and sometimes controlled by the Bank itself. As a result, the CJEU held that the referring court had to consider whether the average consumer who is reasonably well-informed and reasonably observant and circumspect, was placed in a position to ascertain whether the conditions to increase the charges have occurred and the effect of such changes on the charges. If this is not the case, then the Agreement would be deemed non-compliant with the transparency requirements under Article 10(2)(k).

The third question related to a provision under Polish Law which stated that where a lender breaches, amongst others, the abovementioned obligations, the lender forfeits his right to collect interests and other charges from the consumer. The CJEU was asked to consider whether such a penalty could be regarded as proportionate if it applied indiscriminately, irrespective of the gravity of the failure to provide information. The CJEU noted that it was up to the referring court to determine whether the severity of this penalty imposed by polish law was commensurate with the seriousness of the infringements. However, the Court confirmed that where a lender breaches a "vitally important obligation" under the CCD, EU law does not prohibit national laws which penalise such lender by stipulating the forfeiture of entitlement to interest and charges. Such a penalty can only be deemed disproportionate if the lender fails to include terms which, by their nature, cannot have a bearing on the consumer's ability to assess the extent of their liability,

Conclusion

The CJEU's ruling reaffirmed the importance of transparency in consumer credit agreements and that lenders must ensure that all cost-related information is presented in a clear and verifiable manner.

The author thanks Kylie Zammit, student intern at Ganado Advocates, for her assistance in drafting this report.

Disclaimer: Ganado Advocates contributed this law report but was not involved as legal advisors in the case.

Kelly Cini is an Advocate at Ganado Advocates