In mid-December 2022, the Law of October 6, 2022 on Amendments to Laws to Counter Usury (the so-called "Anti-Lusury Law") came into force, introducing a package of legal changes that apply to lenders and borrowers, and regulate the consumer loan market in terms of reducing the possibility of abuse by loan companies.
As the main changes, with regard to borrowers, it is important to point out the strengthening of their legal protection through:
- Defining non-interest costs;
- Determining the maximum non-interest costs of loans,
- Reducing non-interest costs for consumer loans,
- preventing so-called "loan rollovers," i.e., taking out more loans to pay off the previous one,
- The introduction of a creditworthiness test each time.
The changes also apply to Lending Institutions, which are subject to specific requirements, including but not limited to:
- The obligation to apply a credit score;
- the obligation to operate as a joint-stock company or a limited liability company (with a supervisory board) with a minimum share capital of PLN 1,000,000 contributed in cash;
- Among the authorities there must be no persons convicted of economic, fiscal, documentary crimes;
- The obligation to obtain an entry in the Register of Loan Institutions maintained by the FSC (Article 59ac of the May 12, 2011 Law on Consumer Credit) and the possibility to start operations only after the entry;
- incurring supervision costs charged % on the total revenue generated from consumer credit activities for the preceding year;
- Supervision of the Financial Ombudsman (in terms of the application of the so-called "complaints procedure" - based on the Act of August 5, 2015 on the processing of complaints by financial market entities and the Financial Ombudsman) + paying contributions to the maintenance costs of the Ombudsman's Office.
Since December 2022, the first part of the provisions of the Anti-Counterfeiting Law has been in effect, another part of its provisions became effective on May 18, 2023, and deals with, among other things, the regulation of creditworthiness, including serious consequences for lenders who choose to violate the obligation to verify creditworthiness, or to finance customers who have had problems repaying previous loans.
The amendments also introduce #KNF's coverage of the supervision of the activities of Loan Institutions. Among other things, loan companies will be obliged to submit quarterly and annual reports to the FSC, and failure to fulfill these obligations or to perform them incorrectly, as well as a finding that the activities of a Loan Institution are performed in violation of the Act, will result in the imposition of a fine of up to PLN 15,000,000, or even in its removal from the register of Loan Institutions. The FSC will also be able to impose a fine on the member of the management board of the Loan Institution directly responsible for the irregularities found, in the amount of up to PLN 150,000.
This part of the law's provisions is scheduled to take effect on January 1, 2024.
Significantly, in the case of entrepreneurs providing only b2b loans and have adequate compliance in this regard, the law's strictures will not apply.
