Poland’s Office of Competition and Consumer Protection (UOKiK) and Financial Ombudsman are introducing a joint position on early credit repayment.

Since the Financial Ombudsman’s inception in Poland on 11 October 2015 until the end of April 2016, it received more than 500 complaints concerning consumer credit. Of those, around 100 have concerned inadequate settlement when the credit has been repaid early, particular the return of insurance premiums. UOKiK has likewise received complaints and inquiries concerning divergent interpretations of the rules on early credit repayment.

Customers who have repaid their consumer credit early have complained to us that they did not receive a proportional return of their initial costs — administrative fees, commissions or insurance fees. We believe this is a bad practice that infringes provisions of the Consumer Credit Act. Because such complaints continue to come in, we undertook with UOKiK to take a clear stand, said Financial Ombudsman Aleksandra Wiktorow.

Costs apply only to the actual period credit is used

In the experience of both institutions, creditors usually do not require consumers who repay credit ahead of schedule to pay interest for the unused period of the loan. However, they often do not reduce or return the various costs they collect for one-time activities or services along the way — processing or administration fees, for example.

We believe that when consumer credit is repaid early, the creditors should reduce and return all the costs of the credit, regardless of its nature. Of course, the return must be commensurate — that is, cover the period from the date of actual repayment of the loan until the final repayment date specified in the agreement. Reimbursement should also not depend on when those costs were actually incurred by the borrower, said Dorota Karczewska, Vice-president of UOKiK.

UOKiK and the Financial Ombudsman’s interpretation of consumer credit law

From Art. 49 paragraph 1 of the Act it should be understood that

• if consumer credit is repaid early, all the possible costs of that credit are lowered, regardless of their nature or when they were incurred by the borrower
• the reduction is proportionate — it applies to the period from the day the credit is actually paid to the day of the final payment as laid out in the agreement.

The following points are key to the above interpretation:

Article 5, point 6 „the entire cost of the credit — all costs the consumer is required to cover in connection with the credit agreement, particularly:

a)    interest, payments, commissions, taxes and profit margin, if they are known to the lender and

b)   the costs of additional services when paying them is essential to receiving credit - with the exception of the cost of notary fees incurred by the consumer”

“Art. 48 The consumer has the right to repay credit, entirely or partially, at any time before the date of repayment stated in the agreement”.

“Art. 49 paragraph 1. If credit is repaid before the date stated in the agreement, the entire cost of the credit is reduced by those costs applying to the period by which the duration of the agreement is reduced, though the consumer covers them before the credit is repaid.

2. If part of a loan is repaid before the date specified in the agreement, paragraph 1 shall apply accordingly.”

Additional information for the media:

Press Office, UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw
Phone.: +48 22 827 28 92, +48 22 55 60 314, +48 22 55 60 430
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]

Twitter: @UOKiKgovPL