“The limits of consumer rights protection in finance” is the title of the discussion panel in which Tadeusz Białek, president of the Polish Bank Association, Tomasz Chróstny, president of the Office of Competition and Consumer Protection, Maciej H. Grabowski, president of the Center for Strategic Thoughts, Jacek Jastrzębski, chairman of the Polish Financial Supervision Authority, Cezary Kocik, president of mBank, and Michał Ziemiak, financial spokesman, took part.
– Relations between financial institutions, the condition of the financial sector versus the situation of consumers both in Poland and in the European Union, is a topic that has been recurring at the European Financial Congress for years, because it is important for the economy, in the social dimension, and it is also important politically – emphasized Marek Tejchman, deputy editor-in-chief of DGP, who moderated the discussion.
How should sector leaders understand the regulatory environment? How to adapt strategies to it and what should be the role of supervisory institutions in such a situation, and, above all, should consumer protection have limits? These are some of the issues that were raised in the debate.
Swiss franc loans were an impulse
As experts unanimously assessed, the most striking example of the impact of case law on the financial sector is the so-called Swiss franc saga, i.e. court disputes between banks and borrowers regarding loans granted in Swiss francs. The judgments are most often favorable to borrowers, declaring contracts invalid due to the presence of abusive (illegal) clauses. The latest statistics from the Ministry of Justice show that the dynamics of complaints is slowing down. It is true that only in the first quarter of this year there were 12.6 thousand. new cases, but as the ministry emphasizes, it is half as many as a year ago in the same period.
According to Jacek Jastrzębski, what is happening now with other mortgage loans – the raised doubts or risks – is a consequence of Swiss franc issues.
– What we see now in relation to loans other than those denominated in foreign currencies, such as the sanction of a free loan, the search for abusive clauses and possible provisions that could be a starting point in court disputes against banks – it was developed on francs – said the head of the Polish Financial Supervision Authority graphically.
As he said, from an economic point of view, the optimal solution was the settlement proposed by the Polish Financial Supervision Authority, but the case law went further.
– It was bad, but it’s hard to argue with that. The absolute conclusion for us is to draw lessons from the franc saga in order to be able to manage these types of problems in the future. So that we do not become recipients of solutions that are created on specific issues, and then a certain critical mass is generated and they become a systemic solution – he warned.
Limits of consumer protection
Tomasz Chróstny also emphasized the issue of conclusions for the future, but also the role of consumer protection.
– We are in a reality where we must not only manage risk, but also try to anticipate the future, technological, environmental and social changes. Past experiences must also make us realize that consumer protection is a value that constitutes the foundation of market development. Safe products are welcomed by consumers and customers, so they help the market grow – he emphasized. – Consumer protection is primarily intended to support the safety of trade and there are no such things as its limits. These limits are always set to equalize the opportunities between consumers, who are the weaker side compared to entrepreneurs or banks, he added.
When asked about the limits of consumer protection, Maciej Grabowski cited examples of court hearings regarding environmental protection, including: a citizen of Peru against the German energy company RWE for contributing to global warming.
– Climate-related issues have become more important for modern people and these claims will be with us, they may accumulate. I don’t think we’ve reached the wall in the banking sector either, he said.
Michał Ziemiak, however, pointed out that the borders were expanded as a natural reaction of the regulator or the EU legislator to identified irregularities.
– These boundaries are largely defined by EU law, which is then transferred to national law. We have procedural limits, as in the case of the currently discussed draft Swiss franc law. We also have boundaries that are difficult for us to grasp – market ones, which may raise objections related to the desire to artificially create certain claims and look for opportunities to earn money. – he listed.
However, as the head of the office that protects individual interests of clients, he assessed that “in some respects” there is overregulation of the market, and consumers receive too many tools and information that “ultimately do not lead to any sensible solution.”
– It is a matter of possibly civilizing the regulations in such a way that the level of consumer protection is not lowered, but at the same time so that they do not become the wall from “Game of Thrones” that everyone was afraid of, that if it gets through it, it will be the end of the world – he illustrated. – Although it may sound trivial, we have a chance to learn from our mistakes. There is an EU position from April this year, which clearly indicates that overregulation leads in two wrong directions. On the one hand, it limits competition on the market, but on the other hand, the customer, as confirmed by research, does not gain the protection he would expect from it, he noted.
In his opinion, the reform of systemic solutions should start at the European level.
– In fact, European law is the field in which we operate – he noted.
What distorts the system
Do banks need some level of consumer protection to be able to earn money safely?
– Unfortunately, it is difficult to talk about these limits, considering the far-reaching legal uncertainty, said Tadeusz Białek. – I mean, for example, the issue of the difficult to predict jurisprudence of the CJEU, setting increasingly far-reaching expectations that were completely unforeseeable at the time the contracts were concluded. – he pointed out.
He also drew attention to the issue of “the very negative phenomenon of commercialization of consumer rights protection.” These are compensation offices.
– Without actually having any boundaries, they simply openly abuse consumer protection instruments – said the president of the Polish Bank Association. – Example: free credit sanctions. We are dealing with mass purchase of receivables for 10-15 percent. values and convincing the client that he is basically receiving money for free because he doesn’t have to do anything except sign the contract. However, if the compensation law firm later pursues such a claim on its own behalf and for its own profit, it recovers 100%. value of the claim, using, shockingly, the consumer protection regime, it is difficult to really say that we are dealing with such protection – he pointed out. – This is simply maximizing the profit of compensation law firms – he added.
As he assessed, another example of abuse of consumer protection provisions is the use of the institution of the Financial Ombudsman, from whom these law firms are to conceal the fact of concluding an assignment agreement. He also called Swiss franc cases an abuse and distortion of consumer protection.
– The law firm’s actions consisting in trying to obtain, in fact, not a loan, but an apartment for free, constitute an abuse of consumer rights protection. In a situation where you actually receive an apartment from the bank as a gift, it is difficult to talk about real consumer protection. These are simply distortions of the system that, unfortunately, have a negative impact on the entire perception of consumer rights protection, he said.
Risk increases cost
– Consumer protection must exist – emphasized Cezary Kocik, adding that banks have no problem with it and do not question it. – It is not about how protected clients are, but about the predictability of the evolution and interpretation of the law – he said. – Nobody questioned Swiss franc loans for many years. When providing them, we did not assume that we were breaking any consumer rights. And that’s the problem, this predictability. Because if someone consciously violates consumer rights, he or she should be penalized very severely, he emphasized.
The president of mBank also drew attention to the economic dimension of consumer protection.
– We complain in Poland that loans are expensive, but how can they be cheap if they have to take into account these consumer protection risks? I’m not talking about the fact that we have inflation, interest rates, and banking taxes, but every common-sense entity that wants to lend someone money must also take into account the risk in the margin. I don’t only think about credit risk, but above all about legal risk, he said.
And he pointed to the long-term consequences of Swiss franc issues for the economy.
– In PPK, one of the very solid components are bank shares, so pensions will be lower because what happened with Swiss francs. Nobody talks about it at all, said Cezary Kocik.
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