At loggerheads with banks – consumer credit and early repayment

The last few months have certainly not been easy for the Polish banking sector. The pro-consumer interpretation of the law in relations with banks, supported by EU jurisprudence, grows stronger.

This obviously refers to the famous judgement of the Court of Justice of the EU of 3 October 2019 in case C-260/18, which, as the practice so far shows, will certainly contribute significantly to the unification of the jurisprudence of the Polish courts. Just to recall – the Court of Justice made it clear in that case that the inclusion in a credit agreement of the so-called “abusive clauses” (i.e. contractual provisions which substantially infringe consumer rights) affects the validity of that agreement. As a result, depending on whether the agreement in question, after the exclusion of the abusive clauses, still fulfils the function of a credit agreement (i.e. whether it contains the so-called “material elements” for this type of agreement), the credit agreement is wholly or partly void. Each of these solutions is measurably advantageous for the so-called franc debtors. The first one results in the recovery of the payments unjustifiably made to the bank, while the second one results in the credit being converted into PLN with effect as of the day of entering into the agreement, using a favourable interest rate at LIBOR + the bank’s margin (which, with the current negative LIBOR rate, in some cases, results in almost zero interest rate for the credit).

With all the media coverage of this judgement, many people could have missed another important ruling of the EU Court of Justice issued at the time may; namely, the ruling on cases of early repayment of the credit, which are not so rare. In its judgement of 11 September 2019, in Case C-383/18, the Court confirmed the important principle that the consumer’s right to a reduction in the total cost of the credit in the event of early repayment includes all costs which have been imposed on the consumer.

Let’s assume, therefore, that we incurred a liability for the amount of PLN 30 thousand for the period of 5 years, with the credit interest rate of 10% per annum, and in addition, we paid a preparatory commission amounting to 10% of the amount of the credit granted (PLN 3 thousand). After a year, we came to the conclusion that we want to get rid of all the debt and pay off all the remaining credit. What should our settlement with the bank look like? Pursuant to Article 49(1) of the Consumer Credit Act, “where the total cost of the credit is repaid in full before the term specified in the agreement, the total cost of the credit shall be reduced by the costs relating to the period by which the duration of the agreement was reduced, even if the consumer had borne them before that repayment”. However, banks often applied their own legal interpretations of this provision, not necessarily for the benefit of the consumer, in principle recognising that only future interest can be annulled in such a situation. This argument is obviously unfounded and consumers affected by such a bank action should at this point make their claim for reimbursement of the overpaid payment. Coming back to our example, the consumer would be able to recover as much as 80% of the credit costs incurred, i.e. PLN 2.4 thousand.

Therefore, banks are obliged to set additional reserves in the budget for the settlement of consumer claims – not only those relating to the annulment of concluded credit agreements in CHF, but also those relating to the reimbursement of so-called early repayment costs, i.e. in proportion to the credit period under the agreement, which was not used by the consumer.

The current trend is certainly a good forecast, bearing in mind that we require banks – extremely important institutions of public trust – to maintain the highest standards of honesty and integrity in their operations. Stigmatisation of inappropriate actions should contribute to improving bank-consumer relations in the future.

Attorney-at-law Mariusz Maksis