English »Legal Updates
Late Withdrawal from Cash Value Life Insurances
When cash value life insurance policies are taken out, the insurer has a duty to provide information. In the event of violations, policyholders could still demand a refund years later – usually when the insurance performed poorly. To stop this practice, the law was amended in 2018. Under the new rule, one only got the surrender value after five years from conclusion of the contract. The Supreme Court recently recognized the illegality of the new regulation. This is because the same legal consequences are provided for a withdrawal after five years as for a termination (sec 176 para 1 VersVG). Accordingly, the previous case law remains applicable. The life insurance policy must be rescinded under the law on enrichment. (7Ob185/21p)
16. March 2022
Exclusion of Russia from the SWIFT banking system
Swift (Society for Worldwide Interbank Financial Telecommunication) is a Belgium-based limited liability cooperative. It creates common processes and standards for participating banks worldwide to process payments securely and quickly. As a result of the Russian attack on Ukraine, the Council of the European Union excluded, by regulation, some Russian banks from the SWIFT banking system. Therefore, payments to and from Russia will be significantly restricted. There are no international alternatives, but in recent years Russia has developed its own payment systems, e.g., SPFS and Mir. (ABl 2022 L 063)
2. March 2022
European Union initiates infringement procedure against Austria
In 2019, the European Union enacted a directive on the protection of persons reporting violations of EU law. The directive deals with the reporting of violations against explicitly mentioned areas such as money laundering or corporate taxation offenses. In principle, the member states were obliged to implement a national law for the protection of whistleblowers by 17.12.2021. Austria has not yet implemented this law, which is why the EU Commission has now initiated an infringement procedure against Austria.
16. February 2022
Consumers to be repaid debit interest for deferred loans
In order to provide financial relief to consumers who had become unemployed or were on short-time work as a result of the pandemic, a statutory deferral of loan installments for consumer credit agreements was passed at the beginning of 2020 (cf. Section 2 2nd COVID-19-Justice Accompanying Act). Nevertheless, some banks continued to charge their customers debit interest even during the deferral period. Subsequently, the Association for Consumer Information (Verein für Konsumenteninformation) filed a lawsuit against this practice. This lawsuit has now been upheld by the Austrian Supreme Court (OGH). According to the ruling, there should be no burden on consumers during the deferral period. The banks now have three months to refund the overpaid interest. (3Ob189/21x)
2. February 2022
Amendment of the Covered Bond Act
As of 08.07.2022 and implementing the EU Covered Bonds Directive (EU-CB-Directive), Austria’s new Covered Bond Act (PfandBG) will enter into force. The amendment is intended to increase the attractiveness of the Austrian covered bond market and eliminate distortions of competition within the EU. The regulations on covered bonds currently scattered over various national provisions (HypoBG, PfandbriefG and FBSchVG) will be unified. One of many innovations is the possibility for authorized credit institutions to now issue all forms of covered bonds. (Federal Law Gazette I No. 199/2021)
18. January 2022