• EGF Council, a financial intermediary, habitually offered its customers loans the terms and conditions of which failed to comply with the needs of the customers or their capabilities insofar as future repayment was concerned.
• The President of UOKiK held that by doing so, the company infringed upon the collective interests of consumers.
• The penalty imposed was in excess of PLN 6.3 million.

Europejska Grupa Finansowa Council was a Wrocław-based credit broker operating in more than 50 towns and cities in Poland under the “Personal Finanse” brand. Its offer was aimed at those consumers who would have found it difficult to secure a loan from other financial institutions. The Competition Authority launched proceedings against EGF Council back in December 2016 and issued a consumer warning against the activities of the company. The UOKiK has decided to take action following various complaints received from consumers.

– The employees of EGF Council would manipulate the information provided to consumers, driven by the desire to ramp up profits at all costs. They encouraged them to borrow more money than they would be able to repay later on. As a result, the customers would often find themselves in even greater financial difficulties. These practices were highly detrimental to consumers, hence our decision to impose a substantial penalty upon the company – says Marek Niechciał, President of the UOKiK.

The UOKiK has concluded that the financial broker operating under the business name of EGF Council was guilty of a number of improper practices, including:

1. Offering loans to consumers which did not correspond to their actual needs or their capability for future repayment.

Consumers would receive offers which substantially exceeded their indicated needs. Although they would often raise their doubts, the representatives of EGF Council would assure them that the offer was advantageous, since, as they claimed, the excess amount may be returned to the bank; they also claimed that the loan was a constituent part of a wider plan aimed at clearing the consumer’s credit history or at enhancing their creditworthiness.

As one of the consumers later wrote: She told me that the best option for me was a loan in the amount of PLN 27,879.01 with a loan payment of PLN 600 per month; she also told me not to worry, because I didn’t need to use all of that money and that I could simply take out PLN 6000 (which was all I needed), with the further 6,673.80 being the amount of the fee which they charged. That would leave me with the remaining amount of about PLN 15,000.00 which, as they told me, I could simply pay back to the bank, in which case they would set me up with a monthly loan payment of PLN 100 for the next 72 months.

2. Encouraging consumers with no creditworthiness to take out obligations through third parties which were referred to as guarantors, backers or underwriters.

The employees of EGF Council assured their customers that, after some time, the obligations would be transferred to the actual borrower. However, under the provisions of applicable laws, the assignment of liabilities requires the consent of the creditor. There was no way of telling whether the bank would, in fact, agree to such assignment. One of the consumers has notified the Competition Authority of the following situation: They requested for a guarantor to be present, and so I volunteered. When it came to signing the contract, it has turned out that this loan was in fact made out in my name for the total amount of PLN 27 434.44 for the period of 96 months, with the aggregate amount to be repaid being PLN 67 265.86.

3. Failing to inform its customers of the actual costs of financial intermediation when concluding the contract.

The consumers would often be taken by surprise by the amount of the fee which they would have to pay. One of the consumers informed that: (...) I would like to mention that in each case I asked the company employee why the loan amount was so high, since all I ever wanted was to take out a loan in the amount of PLN 10,000. In response, she said that PLN 10,000 was what I would get, with the rest of the amount to be transferred for this account I knew nothing about because the intermediary and the bank had to make a profit out of this.

All of the practices which were challenged by the UOKiK have been described in the decision. The penalty imposed was in excess of PLN 6.3 million. The decision is not final and may be appealed against to a court of law.

The activities of Europejska Grupa Finansowa Council S.A. also form the subject of an investigation conducted by the Regional Prosecution Service in Wrocław (case no. RP I Ds.41.2016).

Additional information for the media:

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