CJEU ruling clarifies borrowing rate must exclude credit costs—what EU lenders need to do now

EU RegCORE Client Alert | Banking Union

QuickTake

The Court of Justice of the European Union (CJEU) judgment on 23 April 2026 in Case C-744/24 (the Judgment) has practical significance beyond the Polish consumer-credit dispute from which it arose.CJEU, Judgment from 23.04.2026 - C-744/24 (P.W. v Bank Polska Kasa Opieki S.A.), ECLI: EU:C:2026:337, (available here).Show Footnote The CJEU confirmed that, under Directive 2008/48/EC (the Consumer Credit Directive), the borrowing rate may be applied only to the amount of credit actually made available to the consumer, not to amounts used to finance costs such as insurance premiums that form part of the total cost of credit.Judgment, para 55-58.Show Footnote

For EU financial services firms, the issue is therefore not only whether legacy wording is technically compliant, but whether product design, pricing logic, APR calculations and customer documentation reflect the CJEU’s separation between (i) the amount of credit actually made available and (ii) the costs of obtaining that credit.

• What changed. Credit-financed costs – including insurance premiums linked to more favoura-ble loan terms—must be kept outside the interest-bearing credit base and cannot become in-terest-bearing merely because they are financed by the lender.Judgment, paras. 40-43.Show Footnote
• Who is affected. The Judgment is binding as a matter of EU law across all Member States and is directly relevant to all EU-regulated credit institutions, consumer credit providers, and firms providing consumer lending—including motor finance, personal loans, retail credit, and point-of-sale finance—where the borrowing rate is applied to financed costs forming part of the total cost of credit. It applies equally to agreements currently in force and new agreements, with no transitional period.
• What to do now. Firms should consider conducting a targeted review of affected consumer-credit products, pricing logic, APR disclosures and legacy portfolio exposure.