• The President of UOKiK, Tomasz Chróstny, imposed a fine of over PLN 44 million on Santander Consumer Bank.
• The President of the Office of Competition and Consumer Protection questioned practices related to granting consumer loans: costs of insurance being included in the total amount of the loan and contract proposals being sent to customers, many of whom did not receive a loan at all or received it with different terms.

The President of UOKiK issued a decision stating that Santander Consumer Bank violates collective consumer interests. The proceedings in the case had been initiated on the basis of a notification from a consumer organisation. Two practices had raised doubts.

The inclusion of the premium for an additional insurance service in the total amount of the loan. A consumer who takes a consumer loan with the insurance from Santander Consumer Bank can credit the cost of the loan. However, the bank unlawfully includes the cost of insurance premiums in the total amount of the loan. Pursuant to art. 5 items 6 and 7 of the Act on consumer loans, the bank should only include the premium for the additional insurance service as a loan cost, like e.g. a commission. Otherwise, the total cost of the loan appears smaller and more attractive, and the amount paid to the customer appears higher. That is not correct, as there is an insurance premium to pay (an additional cost) and the loan amount is actually reduced by the amount of the premium. The questioned practice continues despite decisions issued by the President of UOKiK against other entities and court judgments.

- The bank, when providing information on the total amount of the loan, misled consumers as to the proportion between the total amount of the loan and its cost. This makes the bank's offer appear more favourable to the consumer than it really is, and better than the offers from other creditors who provide accurate information on the cost of the loan. Customers of Santander Consumer Bank, based on the misleading information, may - when comparing the offer of the bank with offers of other financial institutions - decide on an apparently beneficial loan, which they would not do if they had correct information about the proportion between the cost and the total amount of loan granted by Santander Consumer Bank - says Tomasz Chróstny, President of UOKiK.

The bank's action infringed economic interests of consumers who, as they did not have the opportunity to fairly compare the bank's offer with that of other banks which provided correct information about the total amount of the loan, could have chosen a less favourable offer in terms of costs they would have to bear. On the other hand, this affected the fairness of competition between financial institutions - the seemingly attractive offer of Santander Consumer Bank fared better when compared to the offers of other banks. It might have drawn attention of consumers on online loan comparison sites, which would have not been the case if there had been reliable information about the fact that the insurance premium was included in the total amount of the loan.

Misleading consumers. Santander Consumer Bank sent letters to selected existing customers informing them that they could take out a consumer loan on attractive terms. The bank's proposals contained wording that suggested a guarantee that such loan would be available. It was only after a creditworthiness check at a branch that it became apparent that some consumers were unable to take a loan on such terms. In the opinion of the President of UOKiK, the bank misled consumers through the wording used. This practice was abandoned by the bank.

Example correspondence:

'Dear Ms (...), on this occasion, we have prepared exclusively for you a cash loan of up to PLN 5,000.00, with 0 % commission and low interest rate'.

'Dear Mr/Ms (...), you have just finished repaying a cash loan from our bank. We are grateful for the trust you placed in us. In appreciation of our cooperation, we have prepared a new proposal for a 'lightweigh' cash loan for you'.

Financial penalty

The President of UOKiK, Tomasz Chróstny, imposed a fine of PLN 44,212.688 on Santander Consumer Bank (PLN 38.2 million for including the premium for an additional insurance service in the total loan amount and PLN 5.9 million for misleading consumers).

The amount of the fine was influenced by the long-term character of the practices - the bank had been communicating the terms of the loan, under which many consumers ultimately were not able to receive the loan, from January 2015 to September 2018, and the inclusion of insurance in the total loan amount - although practised from at least as early as 2016 - has not yet been abandoned by the bank. Also, of great importance for the amount of the penalty was the fact that the bank was aware that its practice diverged from that of other market players. UOKiK's President has for many years consistently pointed out that the cost of the ancillary service should only be included in the total cost of the loan, which has also been confirmed in court judgments. The President of UOKiK called for this practice to be discontinued. The bank is also obliged to inform consumers of the decision of the Office of Competition and Consumer Protection.

The decision is not final and may be appealed to the court.

Consumers, please remember:

Total amount of a loan - is the amount that the lender actually pays to the consumer.

Total cost of a loan - these are all the costs which the consumer has to pay in connection with the contract, i.e. all the interest, charges, commissions, taxes and margins, as well as the costs of the ancillary services (e.g. insurance) which are obligatory in order to obtain the loan (or to obtain it on certain terms).

Information form - this must be provided by every lender prior to entering into a contract. It contains data on the costs of the debt and the fees charged.

A consumer loan contract may be withdrawn within 14 days. In such a situation, the consumer must reimburse interest for the time during which the money was in their account.

Consumer support:

Tel. 801 440 220 or 22 290 89 16 - Consumer Helpline
Email: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Consumer Ombudsmen – in your town or district
Financial Ombudsman – [SCODE]cG9yYWR5QHJmLmdvdi5wbA==[ECODE]

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