Why case against Danish bank could create ‘domino effect’
Denmark’s Consumer Ombudsman (Forbrugerombudsmanden) is to take Jyske Bank to court after the bank charged interest rates to its customers without their consent.
“The consumer ombudsman has issued a court summons Jyske Bank to clarify whether the bank had the necessary contractual authority to introduce and charge negative interest on savings accounts without the customers' active acceptance,” the ombudsman said in a statement on Thursday.
Jyske was one of several Danish banks which charged negative interest on customers’ deposits between 2019 and 2022. Central interest rates have since gone up several times.
A successful suit by the ombudsman against the bank could have far-reaching consequences for Denmark’s banking sector, according to Mads Reinholdt, the director of the Danish consumer rights group Tænk.
“If the consumer ombudsman’s case is upheld by the court, it would mean that Jyske Bank first and foremost will have to pay a lot of money back to customers in the first instance,” he said.
“But so would a lot of other banks probably have to do too, because banks’ terms and conditions around this are very similar. So it could have far-reaching consequences,” he said.
In the statement on Thursday, consumer ombudsman Christina Toftegaard Nielsen said “when customers enter into an agreement with their bank, the bank cannot then change significant elements without the customers’ acceptance”.
Jyske Bank has denied any wrongdoing, saying that its terms and conditions, which applied to all private customers, clearly stated that the interest rate was variable and could be changed under certain circumstances.
“As a result of this and a number of other reasons, it is Jyske Bank's opinion that the bank was entitled to introduce and charge negative interest,” the bank said in a statement in response to the court summons from the consumer ombudsman.
“That includes the accounts related to the consumer ombudsman's case against Jyske Bank,” it added.
The summons relates to savings accounts but not to ordinary current accounts.
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“The consumer ombudsman has issued a court summons Jyske Bank to clarify whether the bank had the necessary contractual authority to introduce and charge negative interest on savings accounts without the customers' active acceptance,” the ombudsman said in a statement on Thursday.
Jyske was one of several Danish banks which charged negative interest on customers’ deposits between 2019 and 2022. Central interest rates have since gone up several times.
A successful suit by the ombudsman against the bank could have far-reaching consequences for Denmark’s banking sector, according to Mads Reinholdt, the director of the Danish consumer rights group Tænk.
“If the consumer ombudsman’s case is upheld by the court, it would mean that Jyske Bank first and foremost will have to pay a lot of money back to customers in the first instance,” he said.
“But so would a lot of other banks probably have to do too, because banks’ terms and conditions around this are very similar. So it could have far-reaching consequences,” he said.
In the statement on Thursday, consumer ombudsman Christina Toftegaard Nielsen said “when customers enter into an agreement with their bank, the bank cannot then change significant elements without the customers’ acceptance”.
Jyske Bank has denied any wrongdoing, saying that its terms and conditions, which applied to all private customers, clearly stated that the interest rate was variable and could be changed under certain circumstances.
“As a result of this and a number of other reasons, it is Jyske Bank's opinion that the bank was entitled to introduce and charge negative interest,” the bank said in a statement in response to the court summons from the consumer ombudsman.
“That includes the accounts related to the consumer ombudsman's case against Jyske Bank,” it added.
The summons relates to savings accounts but not to ordinary current accounts.
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