When banks calculating credit agreements in Swiss francs fail to factor in negative interest rates, consumers pay higher rates than they should. UOKiK has issued its first decisions on negative interest rates in CHF-based home loans in proceedings against ING Bank Śląski and mBank.

Poland’s Office of Competition and Consumer Protection (UOKiK) regularly monitors the financial services market: it reviews standard contracts and advertisements, and analyses other bank practices. In January 2015 UOKiK opened preliminary proceedings against all banks that have offered mortgages in Swiss francs.

UOKiK took action when, early last year, the franc strengthened against Poland’s currency, the zloty, causing CHF-based mortgage loan rates to also rise. At the same time, the LIBOR index value, used to adjust interest rates on adjustable rate mortgages, fell below zero. This should have brought loan installments down. In some cases, a negative LIBOR has caused credit interest rates to fall below zero. However, UOKiK received information that not all banks factor in the negative interest rate. Yet loan agreements stated that the interest rate would be the sum of the base rate LIBOR and the loan’s margin. This information led UOKiK during preliminary proceedings to inquire about the bank’s practices in determining rates.

UOKiK opened proceedings against ING Bank Śląski and mBank in June 2015. As a result, two decisions on the negative interest rate have been issued. Six other proceedings remain ongoing.

The banks’ responses

ING Bank Śląski volunteered to change its practices, and will use a negative interest rate on loans and convert the interest rate applied to this point. It will also return to customers the amount resulting from the difference between the current interest rate and the one that factors in the reduced LIBOR. Finally, the bank will inform customers of the steps it is taking.

mBank, on the other hand, has refused to factor in the negative interest rates on CHF-based mortgage loans, prompting UOKiK to order it to do so. It must also remove the effects of its infringement by reimbursing borrowers the amount resulting from the conversion of the interest of the negative interest rate. For violating the collective consumer interests the bank is to pay a penalty of more than 6.5 million PLN [1,48 million EUR].

Both banks will publish online UOKiK’s decision, which may be appealed in Poland’s competition court.

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]

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