New General Banking Conditions effective from 1 March, 2017

Good to know: the General Banking Conditions (GBC) apply to all forms of bank financing, both private and commercial. Approximately every six years, the Dutch Banking Association and the Dutch Consumers Association draft a new version of the GBC. The previous versions from 2002 and 2009 were brief, business-like, and written from the bank’s perspective. In short, full of technical terms and hard to read.

The idea behind the GBC 2017 is to give the customer clarity on their rights and obligations towards the bank. Most noticeable is that the GBC now counts 22 pages, written from the bank’s perspective to the customer in plain language. Many of the articles also use examples from real life to clarify things.

The style of the GBC 2017 is not the only change; its contents have also changed from the GBC 2009. A number of relevant changes:

  • In the context of the bank’s duty of care according to Article 2 of the GBC, it is explicitly stated that the bank should strive to offer straightforward products and services. The same applies to information on products, services, and associated risks. We expect that this will also affect the next versions of the bank’s special conditions, which apply alongside the GBC (more on this later);
  • The GBC is consistent with the technical developments in communication between bank and customer, such as mobile banking apps. The bank also allows more room for communication through internet banking, email, and/or telephone, instead of written communication.
  • In some cases, disputes may result in proceedings between the bank and a customer. According to Article 28, Paragraph 2 of the GBC 2009, if the bank won the proceedings, it could recover the full cost of litigation from the customer (within reasonable limits). This also includes attorney costs. The GBC 2017 states that, if there is a legal provision for extraordinary costs, that legal provision takes precedence over the GBC. That is the cast for litigation costs; as of 1 March, 2017, banks can only claim a fixed compensation based on the applicable regulations.

Note: a bank will often maintain special conditions for many of its products. This is also the case for common products, including bail, commercial financing, mortgages or pledges, current-account, etc. If you are an entrepreneur, the special conditions will take precedence over the GBC. If you closed the contract as a private individual, the special conditions do not restrict your rights or protection from the GBC.

It is very likely that you did not read the GBC before signing for your financing product. When refinancing your company, attracting additional financing, ending your financing, or if your company runs into financial difficulties, the conditions suddenly become important. Contact one of our Financing & Securities specialists to get a clear view of your rights and obligations.

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Helen Houben
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