Two decisions and 29 ongoing proceedings – this is the result of recent actions of the Office of Competition and Consumer Protection referring to the banking sector. The concerns of UOKiK are still raised by the practices of banks granting loans denominated in foreign currencies

The number of complaints at the banking services submitted to the local and regional consumer ombudsmen increased from 8 thousand in 2007 to over 10 thousand in 2008. Borrowers have problems with vague information concerning the interest rates, commission and other fees related to mortgage loans. UOKiK research reveals that 22 percent of consumers financing their real estate purchase in this way experienced negative effects of recalculating of the foreign exchange rates (UOKiK, 2009).

Within its competences, the Office of Competition and Consumer Protection carries out a number of actions with a view to eliminating unlawful practices, harmful for consumers, applied by financial institutions. One of them is constant monitoring of standard form agreements offered by banks.

Mortgage loan agreements are concluded for 20, 30 or even 40 years. While choosing a contracting party we usually take into account the total cost of loan and amount of instalments. Therefore, the most popular loan on the market is a foreign currency-indexed loan (CHF, EUR, USD), commonly known as a foreign currency loan. However, in fact, the capital that the bank lends us is expressed in the Polish currency. Next, the financial institution converts a loan amount from the Polish zloty to a foreign currency, and determines the amount of instalments. However, liabilities towards the bank are paid up in the Polish zloty. All of the above calculations of the loan are made on the basis of a foreign currency exchange rate fixed by the financial institution – the difference called spread constitutes the entrepreneur’s profit. Therefore, it is extremely important that the banks apply transparent policies, based on objective criteria.

With reference to the above, the Office carried out an inspection of banks offering mortgage loans in terms of fixing foreign exchange rates and presented its doubts. The inspection covered standard form agreements, rules and tables of fees and commissions used by 17 financial institutions: Bank Zachodni WBK, BPH, BOŚ, BRE Bank, Deutsche Bank PBC, Fortis Bank, GE Money Bank, Getin Bank, ING Bank Śląski, Invest Bank, Kredyt Bank, Lukas Bank, Millennium Bank, Nordea Bank Polska, PKO SA, PKO BP, Santander Consumer Bank. During the inspection it was established that two institutions did not offer foreign currency-indexed mortgage loans in the examined period (Invest Bank, Fortis Bank Polska), whereas four banks withdrew their offers (Getin Bank, ING Bank Śląski, Kredyt Bank, Santander Consumer Bank).

While formulating the conclusions of the conducted inspection, the Office did not question the amount of spreads, but the lack of clear and precise methods of fixing them. Information obtained by UOKiK reveals that the majority of the banks provides information concerning exchange rates and spread level on their websites or in the exchange rate tables, but does not present methods of their calculations. The situation was different in only one case (GE Money Bank) – the bank calculates rates by adding or subtracting the margin from the average National Bank of Poland exchange rate of a given currency. However, the entrepreneur reserved the right to change the way of calculating the margin. A consumer who does not get clear information about the way of fixing exchange rates can be charged with additional and unjustified costs. During the course of inspection, banks partly changed their practices. Nevertheless, according to UOKiK the practices still do not guarantee that entrepreneurs will not freely determine exchange rates.

It is not the first time that the President of UOKiK has taken actions concerning the method of establishing amounts of spreads by financial institutions. As early as in April 2009 a lawsuit against Millenium bank was filed to the Court of Competition and Consumer Protection. The President of UOKiK questions i.a. a clause which allows the bank to freely shape the exchange rates for instance in the case of foreign currency-indexed loan, the amount of loan instalment is calculated in accordance with the average foreign exchange rate of the Bank as stipulated in the Bank’s Table of Foreign Exchange Rates as of the payment date. Further actions against this and other financial institutions will be taken when the Court of Competition and Consumer Protection will recognize the above-mentioned clause as unlawful. A positive and binding decision of the court will result in entering the statement into the Register of Abusive Clauses. From then on, no entrepreneur will be allowed to apply similar phrases in agreements concluded with consumers. Otherwise, the President of UOKiK will be entitled to fine an entrepreneur with up to 10 percent of the previous year’s revenue. Consumers who experienced any loss due to the application of a given clause will be allowed to pursue their claims in court.

As part of the financial market monitoring, the Office not only examines standard form agreements and files to the court for recognizing specific clauses as unlawful, but also analyses other bank practices. In the last few days, the President of UOKiK issued two decisions on BZ WBK and Santander Consumer Bank. In the first case, according to UOKiK, the way of informing about the offer – Konto 24 prestiż was misleading for the consumers. UOKiK questioned the information included in advertising leaflets and on the official BZ WBK website suggesting that transfers and standing orders made via the Internet or at bank branches are free of charge. Materials collected by the Office during the proceedings reveal that in a given month a consumer was not charged for transfers made at the bank branches, but as far as the Internet transfers are concerned only the first five months were free of charge. Lack of complete, reliable and not misleading information could lead to the situation where consumers driven by advertising message could take wrong decisions concerning the choice of services. The President of UOKiK fined the bank with PLN 1 278 742.

In the decision on Santander Consumer Bank, the President of UOKiK stated that the entrepreneur infringed the obligation of including reliable, complete and true information in consumer loan agreements. During the proceedings it was established that the bank did not provide information concerning some costs, i.a. reminders and calls for payment related in particular to the consumer not fulfilling his/her financial obligations resulting from the agreement. Pursuant to the Consumer Credit Act, an agreement should include information of this kind and should not refer borrowers to the table of fees and commissions, as it was the case here. As a result of UOKiK’s actions, the bank obliged itself to change the practice. Agreements concluded hitherto will be annexed, while new agreements will be completed with all data required by law.

Both decisions are not final. The banks can appeal to the Court of Competition and Consumer Protection.

At present, the President of UOKiK is carrying out 16 explanatory proceedings and 13 administrative proceedings concerning infringement of consumer interests by banks. The greatest number of them, as many as 17 concern the application of clauses entered into the Register of Abusive Clauses. For example, these clauses entitle banks to charge additional fees for delayed payment of credit card debts, calculating high contractual fines when a deposit agreement is terminated earlier or demanding immediate payment of a loan due to consumer’s worsened financial situation. Another 6 proceedings deal with operating in compliance with the Consumer Credit Act. The Offices is examining e.g. whether entrepreneurs provide legally required information on terms and conditions of changing the amount of the actual annual interest rate.

The Office reminds that in case of any difficulties weaker participants of the market should contact their bank in the first place. If their complaint is not considered, they can obtain support from consumer ombudsmen or non-governmental organisations. Free of charge advice can be obtained at tel. 0800 800 008. Moreover, the Banking Ombudsman may help settle disputes between consumers and banks as regards financial claims of up to PLN 8 thousand.

Additional information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw, Poland
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 430
faks (+48 22) 826 11 86
E-mail: [SCODE]bWNpZWxvY2hAdW9raWsuZ292LnBs[ECODE]