Poland has introduced new regulations that will help protect consumers who use the services of creditors. The regulations limit the maximum non-interest costs of credit and interest charged for late payment. Many of the changes resulted from the experience UOKiK has gained from its constant monitoring of the market.

The total cost of consumer credit includes interest, of which the maximum amount is twice the reference rate plus 3.5 percent (currently 10 percent), plus non-interest credit costs. This amount has never been limited on loans, which could therefore exceed by many times the accrued interest. However, that is set to change when, on March 11, provisions of the Supervision of Financial Markets Act enters into force, introducing important regulations including changes to the Consumer Credit Act. For consumers who conclude a credit agreement after that date, the maximum amount of non-interest costs on credit will be equal to the sum of 25 percent of the total amount of the credit and 30 percent of the variable amount depending on the period the loan is taken for. Additionally, the non-interest charges will no longer be permitted to exceed 100 percent of the total amount of the credit. The new regulations also require creditors to return to the consumer all charges when a loan is not paid out including when a credit agreement has not been concluded.

UOKiK keeps a close eye on the consumer credit market. It has issued 34 decisions concerning infringement of collective consumer interests by loan companies in the past year. The Office also assisted in developing the new regulations and initiated numerous changes designed to bolster consumer protection. The Office’s experience shows that entrepreneurs do not always honour the rights of their customers. The problems most often relate to exorbitant fees, which drive up the cost of credit, and the failure by some companies to provide consumers with information required by law.

Exorbitant recovery and interest fees

Concerning exorbitant recovery fees, UOKiK recently issued a decision banning an enterprise from using contract provisions entitling it to charge fees that did not correspond to the actual cost of operations. In UOKiK’s view, the fees for notifications — 50 PLN (ca.12 EUR) for a first late payment notification, 80 PLN (ca. 19 EUR) for a second, for example — should correspond to the postage costs actually incurred by the enterprise when it uses traditional mail, or operator rates when it opts to inform customers by phone of the need to make a payment.

The Office also challenged standard contracts that gave lenders the ability to impose excessive charges for late payments.

UOKiK also took action against dishonest enterprises operating as loan companies which do not actually grant consumer loans, but charge fees for preparing or processing an application. The Authority likewise questioned the amount of these charges when they exceeded the actual value of the service.

Contracts and information requirements

Every lender is required to provide consumers with reliable, true and complete information on, among other things, the amount that is to be paid, the annual percentage rate of charge (APRC) and payment due dates. In decisions it has issued in the past year, UOKiK challenged the infringement of these requirements by lenders and in some cases imposed financial penalties for infringing collective consumer interests. One fine exceeded 320,000 PLN (ca. 74,000 EUR).

In addition to the provisions of the Supervision of Financial Markets Act, two other regulations in Poland will further strengthen consumer protection in the financial market. They include an amendment to the Competition and Consumer Protection Act entering into force on April 17, and the Act on handling of complaints by financial market operators and the financial ombudsman, in force since January 1, 2016.

Additional information for the media:

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