• UOKiK President Tomasz Chróstny investigates the rules under which banks grant credit holidays.
• During the epidemic, the annexes concerning “credit holidays” must not be used to take advantage of credit borrowers' difficult situation and standing.

The President of the Office of Competition and Consumer Protection opened an investigation aimed at examining the rules of offering credit holidays by banks. -The intervention is based on market monitoring and signals from borrowers. Due to the coronavirus epidemic, a lot of people have found themselves in a difficult financial situation and are benefiting from the deferral of credit instalments - the so-called credit holidays. This bank offer may pose problems for consumers later in the future. The signals received by the Office indicate that some banks are trying to take advantage of the difficult situation faced by customers. I do expect more sensitivity on the part of the banking sector and an immediate change of some practices, says Tomasz Chróstny, UOKiK President. The Office has requested banks to provide documents and information concerning the offered credit holidays terms and conditions and is analysing the received responses on an ongoing basis.

Annexes – content amd meaning

Deferral of instalments is granted after the consumer signs a special annex. The UOKiK President is concerned about the fact that the banks include provisions in the annexes which may cause further difficulties for the borrower when claiming their rights in court (e.g. in the case of an intention to demand the annulment of a credit agreement). The provisions imply that the consumer has made a declaration of recognition of a specific amount of the indebtedness. Such a statement carries no relation to the deferral of instalments due to the difficulties caused by the epidemic. According to the UOKiK President , it may violate good practices as it forces the weaker party to the agreement to make a declaration not directly related to the purpose of signing the annex, i.e. to defer credit repayment. In this respect, the content of some of the provisions contained in the annexes used so far by Santander Bank Polska has raised serious doubts, which is also confirmed by the consumers' complaints lodged to the Office. Each confirmed violation of consumer's interests regarding this sensitive issue will meet with an adequate UOKiK President's reaction.

The Office also receives information that banks may interpret the signing of the annex itself as consumer's recognition of the debt. The Office has expressed a similar position in a letter to Santander Bank Polska. In the future, the above may consequently lead to the use of annex signed by the consumer to assess the prescription of claims.

In the opinion of the UOKiK President, this is an unauthorised interpretation. This is due to the fact that the intention of both parties is to defer credit repayment, and not to have the consumer recognise the debt or to make them unable to object to the validity of the credit agreement in the future.

“I do not agree with the argument that signing the annex on suspension of credit instalments can be treated as recognition of debt. I find the use of the annexes as a way of forcing the consumer to recognise the debt, especially in the current situation, unacceptable. Such measures may undermine consumers’ trust in the entire banking sector. Financial institutions, in this extremely difficult times of epidemics, should demonstrate concern for their customers and offer them real support, rather than protecting their particular interests and multiplying their profits. I would expect banks to voluntarily withdraw from invalid clauses and to send a declaration to those consumers who have already concluded annexes with such provisions, indicating that the clauses under investigation are ineffective. I also call for an unequivocal position of the Polish Bank Association and the individual banks that they will not use the annexes concerning credit holidays concluded during a state of epidemic to the detriment of consumers in the future, e.g. as a circumstance related to the interruption of the running of the statute of limitations of banks' claims or recognition of debts,” adds Tomasz Chróstny, the UOKiK President.

Costs of credit holidays - charging interest on interest

Credit holidays consist in suspending repayment of instalments due for a certain period of time. The consumer may suspend repayment of the entire instalment, the principal alone or interest only. According the Office's observations and the signals received from consumers, it appears that in some banks repayment is deferred over time, yet - on the basis of the annex - the interest due for the suspension period is added to the total amount of the credit and the banks calculate further interest on this amount. This method of capitalization of interest instalments involves an additional fee on the part of borrowers.

“Such action by banks is yet another attempt to take advantage of the already difficult situation of consumers. The purpose of credit holidays is to support borrowers who have temporary difficulties in settling payments. Unfortunately, double interest charging may further deteriorate their economic situation, and the mechanism of capitalization of interest itself is not always properly presented to the consumer,” adds the UOKiK President.

Information on the financial implications of the conclusion of the annex and possibility of cancelling the agreement

As the complaints received by the Office also show, consumers may not be sufficiently informed about the financial conditions under which they decide to defer credit instalment repayment. Before concluding the annex, the customer should have complete knowledge of how this will affect the amount of outstanding financial obligations and how much it may actually "cost" them to take advantage of credit holidays offered by banks during an epidemic. To this end, a new repayment schedule may be provided.

The consumers should also be informed about their right to cancel the annex within 14 days and to continue the agreement under the existing terms and conditions if, for instance, the consumer finds that taking credit holidays simply does not pay off or their financial situation has not deteriorated as much as they had originally expected. It is also important that the banks do not require a physical presence in the bank's premises in order to cancel the annex if it was not required at the time of concluding it.

The UOKiK President shall verify whether the banks inform consumers diligently about the consequences of concluding the annex and whether they do not hinder the possible cancellation thereof.

Dear consumer, before you decide to defer instalment repayment:

1. Read the annex thoroughly and carefully - you have the right to read it before you accept it.
2. Familiarize yourself with the credit repayment schedule and with amount of instalments due upon the termination of credit holidays.
3. Consider whether this solution is actually good for you.
4. You have 14 days to cancel the signed annex to the credit agreement. You do not have to do it personally at the bank's premises. Write a declaration of cancelling the agreement and send it to the bank.
5. Should you have any doubt or suspicion of a violation of consumer rights, you can contact the Consumer Helpline at 801 440 220 and 22 290 89 16 or write an e-mail to the address: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]. Telephone and e-mail legal aid is financed from UOKiK funds. You may also notify the Office of the banks' activities by sending your notification to [SCODE]bW9uaXRvcmluZ0B1b2tpay5nb3YucGw=[ECODE].

Consumer support:

Phone: +48 801 440 220 or 22 290 89 16 – consumer helpline
e-mail: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Consumer Ombudsmen – in your town or district
Regional Consumer Centres: Phone: +48 22 299 60 – Dlakonsumenta.pl

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL