The ruling confirms the need to change Polish regulations that allow for a disproportionate penalty of free credit. They are being exploited by law firms solely for the purpose of maximizing their own profit, and not for the protection of consumers, from whom they buy claims for 10-20 percent of their value.
On Thursday, February 13, 2025, the Court of Justice of the European Union issued a ruling (file number C-472/23) based on preliminary questions from a Polish court regarding free credit penalties (SKD). The structure of this case itself reveals several interesting information. The company claiming SKD is a trading company that buys claims from borrowers and recovers from the bank the interest and other costs incurred on the basis of the loan agreement. There’s a clear business and commercial idea to find a rich source of income under the guise of protecting the economic interests of bank customers.
Despite an unfavorable climate for banks in case law concerning disputes with consumers, this specific ruling is nothing more than what is directly stated in the law. It is definitely not “revolutionary,” as law firms have declared, especially those that have accumulated banking client claims in the hope of creating a new segment of highly lucrative business.
To illustrate the real scope of the C-472/23 ruling, it’s worth explaining what SKD involves. If the court, when resolving a dispute between a consumer and a bank, rules that the credit agreement contained abusive (forbidden) clauses or the information contained in it was insufficient, incomplete, or unclear, the bank loses the right to interest and can only demand repayment of the borrowed capital. The bank may therefore be obliged to repay overpaid installments and interest. This is expressly stated by regulations on consumer credit.
The ruling is not groundbreaking because:
1. The Court of Justice of the European Union (CJEU) has not ruled that the interest on borrowed costs is unacceptable. According to the CJEU, the circumstance in which the Annual Percentage Rate (APR) would prove to be overstated does not in itself constitute a breach of the information obligation. This means that the most popular objection, which law firms commonly refer to in SKD cases, has been unequivocally questioned by the Court.
2. The CJEU has stated that it is for the national court to assess whether the average consumer – properly informed and sufficiently attentive and prudent – was able to assess, based on the terms of the contract concerning the change in fees, how his obligation could change.
3. The Court emphasized that the severity of the sanction provided for in national law should be commensurate with the seriousness of the infringements and that the general principle of proportionality, which derives from European Union law, must be observed. The CJEU confirmed that SKD may be considered disproportionate if the violation of information obligations does not affect the consumer’s awareness of the extent of the obligation arising from the contract entered into.
4. In the CJEU’s opinion, the free credit sanction cannot be applied automatically. It is for the national court to assess the seriousness of the obligations violated by the lender and their impact on the consumer’s decision to enter into the contract.
The context of the Consumer Credit Directive and the Consumer Credit Act, which transposes this directive into Polish law, is essential here. The law precisely specifies the catalog of things that the bank must include in the contract. There are nearly 30 elements. The free credit penalty is granted to the borrower if any of these elements are missing or incorrect. The directive, followed by the law, stipulates what should be the subject of the information obligation, so there is no discretion. This is also shown by court rulings: over 90% of them dismiss consumer claims (or, more accurately, the claims of law firms that have bought up consumer claims), as the courts do not find any breaches in fulfilling the information obligation.
The CJEU’s ruling provides an important argument in support of the long-standing thesis about the lack of proportionality in the Polish Consumer Credit Act. The directive leaves it up to the Member States to determine the type of sanctions. It only states that it should be proportional, effective, deterrent. That’s why these sanctions differ between countries.
In Poland, the regulations were incorrectly designed because, reading the law literally, any violation regarding the recording of the elements required by the law in the contract already results in the possibility of a free credit sanction being awarded. This is a complete lack of proportionality, which is explicitly mentioned in the directive and clearly indicated by the CJEU. The sanction – as indicated by the Court – can be awarded when the client is not aware of the extent of the obligation, not for every minor violation.
The CJEU ruling confirms the need to change Polish regulations that allow for a disproportionate sanction of free credit. They are being exploited by law firms solely for the purpose of maximizing their own profit, and not for the protection of consumers, from whom they buy claims for 10-20 percent of their value.
Author: Dr. Mieczysław Groszek
The author is a member of TEP, a banking manager since 1990.
Source: https://managerplus.pl/tsue-nie-kazde-naruszenie-obowiazkow-informacyjnych-oznacza-darmowy-kredyt-66374
