Financing fees and insurance enables consumers to obtain credit without paying all the initial costs from their own funds. In such agreements, the amount recorded as principal may include both amounts intended for the borrower’s needs and amounts used to pay the costs of financing. Including both components in the interest-bearing balance nevertheless raises a question distinct from the legality of the fees or insurance.
By its judgment of 23 April 2026, delivered in Case C 744/24, P.W. v Bank Polska Kasa Opieki, the Curtea de Justiție a Uniunii Europene (the Court of Justice of the European Union) excluded the application of interest to amounts allocated to credit costs that form part of its total cost. The ruling concerns the interpretation of Directive 2008/48/EC (the European Union act on consumer credit agreements) and has consequences both for the calculation of consumers’ obligations and for the structuring of lending products.[1]
The agreement that led to the Court being seised
The dispute concerned a credit of 150,000 Polish zlotys, of which 133,214.92 had actually been paid to the consumer, while the difference of 16,785.08 was allocated to credit insurance. The bank charged interest on the entire amount. Although described as voluntary, the insurance made it possible to obtain a reduced interest rate, so it was necessary in order to access the terms offered. The premium therefore constituted a cost of the credit.[1, paras. 19–20 and 41]
This particularity explains why the judgment cannot be extended mechanically to every insurance policy purchased with borrowed money. It must be established whether the service actually constitutes a component of the cost of financing, according to the criteria laid down by the directive.
The legal distinction between principal and the cost of credit
The directive distinguishes the total amount of credit, representing the sums made available under the agreement, from the total cost borne for the financing. The latter includes interest, fees and other costs known to the creditor, subject to the exclusions provided by law. Ancillary services, including insurance, are included if they are necessary in order to obtain the credit or the terms presented. Interest relating to the credit is defined by reference to the amount drawn down.[2, Art. 3]
In its previous case-law, particularly in Radlinger and Radlingerová and Soho Group, the Court had already established that the amount of credit cannot include sums forming part of its total cost. The distinction is relevant to the annual percentage rate, APR, which expresses the cost of financing as an annual percentage of the amount of credit and enables offers to be compared.[3]
In Case C 744/24, this distinction forms the basis for excluding financed costs from the interest base. The Court held that “the concepts of ‘total amount of credit’ and ‘total cost of the credit to the consumer’ are mutually exclusive”. The prior transfer of the money to the borrower’s account does not change their classification.[1, paras. 42–43 and 53–58]
From an economic perspective, the solution may appear difficult: the creditor advances money, including for payment to the insurer, while the consumer benefits from the service without immediately paying the insurance premium. Under the ordinary logic of lending, the purpose of the amount does not remove the remuneration of the capital, namely the charging of remuneratory interest. The legal explanation, however, lies in the special classification imposed by the directive, which the Court also uses to determine the interest base. For example, a car repair financed through the credit granted constitutes the purpose of the loan; insurance necessary to obtain financing on the terms offered constitutes a cost of that financing.
The regime applicable to financed fees
Under Romanian law, OUG nr. 50/2010 (the Government Emergency Ordinance on consumer credit agreements), Art. 36 limits the categories of costs that the creditor may charge, including an assessment fee and a fee for administering the credit or current account. The administration fee remunerates operations connected with the use and repayment of the credit and, if calculated as a percentage, applies to the current balance.[4]
Permission to charge such a fee must be distinguished from the possibility of including the amount financing it in the interest-bearing principal. Applying the judgment, a cost permitted by national legislation remains subject to the distinction between principal and the cost of financing. The same verification is required for other financed costs, regardless of whether the recipient of the payment is the creditor or a third party.
For example, in an agreement with a nominal amount of RON 50,000, of which RON 2,000 finances relevant insurance and RON 1,000 a fee, the RON 47,000 intended for the consumer’s needs represents the initial interest base. The RON 3,000 may remain repayable under the agreement without generating remuneratory interest. Over time, the calculation must track the repayment of each component, rather than merely deducting a fixed amount from the accounting balance.
The analysis presupposes that interest has actually been calculated on the financed cost. A periodic fee, paid separately and not included in the interest-bearing balance, does not fall within this issue merely because it is owed in connection with the credit. Neither the name of the cost nor the mere difference between the contractual amount and the cash received can replace verification of its purpose and calculation.
Effects on agreements in Romania
OUG nr. 50/2010 reproduces the relevant concepts of the directive and requires the amount of credit, the conditions for applying interest and the APR to be indicated. The interpretation of the Curtea de Justiție a Uniunii Europene must be taken into account when applying the national transposition provisions, both in relations with banks and with non-bank financial institutions.[4, Arts. 7 and 46]
This link does not justify automatic extension to all loans. It is necessary to verify consumer status and the material and temporal scope of the applicable rules. Credit for immovable property is subject to a distinct regime, regulated by OUG nr. 52/2016 (the Government Emergency Ordinance on credit agreements offered to consumers for immovable property), which transposes Directive 2014/17/EU; the application of similar conclusions is not excluded, but requires an analysis of that framework.[5]
For the agreements concerned, the practical consequence is that the clause concerning the interest base must be examined and the affected obligations recalculated. If amounts not owed under the judgment in Case C 744/24 were collected as interest, repayment of the differences may be sought, with the legal basis and applicable sanction identified. Non-compliance of the calculation mechanism does not, in itself, amount to the illegality of the fee or to the absence of any legal basis for the insurance premium.
The judgment does not, in itself, result in the loss of the creditor’s right to collect all interest. The directive leaves the determination of sanctions to the Member States, subject to the requirements of effectiveness, proportionality and dissuasiveness. In Case C-472/23, Lexitor, the Curtea de Justiție a Uniunii Europene examined a national sanction consisting in the loss of interest and costs for breach of information obligations; the existence of that sanction does not, however, turn it into a uniform remedy for all Member States.[2, Art. 23; 6]
Earlier agreements and repayment of interest
The date of the judgment does not mark the beginning of the application of the interpretation of the rule. As a matter of principle, preliminary rulings explain the meaning that the rule was required to have even before the ruling was delivered, subject to the conditions of applicability and procedural rules. By way of example, in Case C 485/19, Profi Credit Slovakia, the Curtea de Justiție a Uniunii Europene confirmed the application of the interpretation of Directive 2008/48/EC to agreements predating the interpretative judgment.[7]
Consequently, even an old or fully repaid agreement may give rise to claims for repayment. In Cases C 698/18 and C 699/18, Raiffeisen Bank and BRD, the Curtea de Justiție a Uniunii Europene accepted that repayment based on unfair terms may be subject to limitation, even if an action seeking a declaration is not subject to limitation, provided that the principles of equivalence and effectiveness are respected.[8]
For breaches of Directive 2008/48/EC, Case C-485/19 is directly relevant: the Court considered incompatible with the principle of effectiveness a three-year limitation regime calculated from the creditor’s unjust enrichment, under conditions that could prevent the consumer from enforcing his or her rights. The age of the payments therefore does not automatically support the conclusion that only differences from the last three years can be recovered; nor does the non-limitation of an action seeking a declaration of nullity make every claim for repayment non-limited.[7, paras. 51–66]
For creditors, assessing the effects requires an analysis of the portfolios in which costs were included in the interest-bearing balance. Even if the differences relating to each agreement may be limited, the number of agreements and the duration of the financings may result in significant aggregate exposure. This cannot be estimated solely on the basis of the value of the fees: repayments, the interest rate and the period during which the financed component remained in the balance are also relevant.
Structuring future financings
The judgment does not require initial costs to be paid exclusively from the consumer’s own funds. At para. 60, the Court accepts offsetting the failure to charge interest on financed costs through a proportionally higher remuneratory interest rate applied to the principal.[1]
From this perspective, creditors may consider financing costs with repayment in instalments and separate accounting, without interest being charged on them, or eliminating their own fees and recovering remuneration through remuneratory interest.
A higher remuneratory interest rate does not necessarily imply a higher APR, because the latter already includes the relevant costs of financing. The effect depends on the actual payment flows. For the consumer, what matters is the difference between the declared cost and the cost actually borne; for the creditor, it is the possibility of remuneration for the financing in a compliant manner, without including the costs in the principal on which interest is applied.
For non-bank financial institutions, this possibility of restructuring remuneration must be aligned with the caps provided for by Legea nr. 243/2024 (the law on limiting credit costs), in the case of agreements falling within its scope. Any increase in remuneratory interest intended to compensate for the failure to charge interest on financed costs must be assessed by reference to the resulting APR and, where appropriate, to the special limits concerning the daily cost and the total amount payable by the consumer. If the product is already at the applicable cap, the creditor can no longer pass on to the consumer an additional cost that would result in exceeding that cap; other components of the price must be adjusted or a lower margin accepted. The possibility indicated by the Court therefore operates within the national limits on the cost of credit.[9]
These consequences generated by the judgment of the Curtea de Justiție a Uniunii Europene may justify reassessing the framework established by Legea nr. 243/2024, also in view of the application, from 20 November 2026, of the measures transposing Directive (EU) 2023/2225 (the European Union act on consumer credit agreements that will replace the current framework). Article 31 of that directive requires Member States to introduce effective measures to prevent abusive practices and the charging of excessive interest or total costs, caps such as those provided for by Legea nr. 243/2024 being one of the available instruments. Although the directive does not impose identical monetary limits for all categories of creditors, compliance with this obligation must be assessed for all agreements falling within its scope. In this context, we consider it appropriate to reassess the national legislation, taking into account both the effects of the judgment of the Curtea de Justiție a Uniunii Europene on the structuring of costs and the justification for the difference in protection between consumers of non-bank financial institutions and consumers of banks who are in comparable situations.[10]
The fact that the differentiation in treatment between credit institutions, namely banks, and non-bank financial institutions was accepted by the Curtea Constituțională (the Constitutional Court) does not close the analysis of its compatibility with European Union law. In a relevant dispute, a reference for a preliminary ruling could clarify whether protection against excessive costs, as organised through the body of national measures, meets the requirements of the directive and complies with equal treatment. The issue should be examined by reference to the characteristics of the products and the situation of consumers, in order to establish the extent to which the legal category of the creditor justifies differences in protection between consumers in comparable situations, by reference to the objective of preventing excessive credit costs.[11]
References
- Curtea de Justiție a Uniunii Europene, Judgment of 23 April 2026, P.W. v Bank Polska Kasa Opieki, C 744/24, ECLI:EU:C:2026:337, in particular paras. 19–20, 41–43, 53–60 and 65–66. Official source
- Directive 2008/48/EC, Art. 3 points (g), (h), (i), (j) and (l), Art. 10(2), Art. 19 and Art. 23. Official source
- Curtea de Justiție a Uniunii Europene, Radlinger and Radlingerová, C 377/14, Judgment of 21 April 2016, paras. 85–91; Soho Group, C 686/19, Judgment of 16 July 2020, paras. 38–43. Official source; Official source
- OUG nr. 50/2010, Arts. 7, 36 and 46, in the wording applicable to the agreement; Legea nr. 288/2010 (the law amending the framework on consumer credit), Art. I, point 15. Official source; Official source
- OUG nr. 52/2016, Arts. 1–3. Official source
- Curtea de Justiție a Uniunii Europene, Lexitor, C 472/23, Judgment of 13 February 2025, paras. 48–58. Official source
- Curtea de Justiție a Uniunii Europene, Profi Credit Slovakia, C 485/19, Judgment of 22 April 2021, paras. 51–66 and operative part, point 2. Official source
- Curtea de Justiție a Uniunii Europene, Raiffeisen Bank and BRD Groupe Société Générale, Joined Cases C 698/18 and C 699/18, Judgment of 9 July 2020, paras. 49–75. Official source
- Legea nr. 243/2024, Art. 1 and Arts. 4–6. Official source
- Directive (EU) 2023/2225, Art. 31 and Art. 48(1). The Directive is already in force; 20 November 2026 is the date on which the national transposition measures apply. Under Art. 47, Directive 2008/48/EC continues to apply to agreements existing on that date until they terminate, subject to the express exceptions provided for certain provisions applicable to open-ended agreements. Official source
- Curtea Constituțională, Decision No. 379 of 11 July 2024, paras. 78–87; Curtea de Justiție a Uniunii Europene, RS, C 430/21, Judgment of 22 February 2022, operative part, point 1. The applicability of equal treatment under the Charter of Fundamental Rights presupposes that the situation falls within the scope of European Union law, in accordance with Art. 51 of the Charter. Official source; Official source
