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KNF after the opinion of the Advocate General of the CJEU: dramatic consequences of free credit

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On Thursday, February 16, the opinion of the Advocate General of the Court of Justice of the EU appeared on remuneration for the use of capital after the mortgage loan agreement was declared invalid due to its unfair terms. He decided that the banks had no rights to him, which resonated widely. On Friday, February 17, the Chairman of the Polish Financial Supervision Authority referred to the announcement.

Anthony Michael Collins, Advocate General of the Court of Justice of the EU, assessed that after deeming a mortgage contract invalid due to unfair terms, consumers may pursue claims against banks that go beyond the reimbursement of cash benefits. At the same time, it is for the national court to determine whether they have such a right. Simultaneously banks cannot pursue additional claims from consumers after the contract has been annulled because EU law prevents it.

In the Friday announcement, the chairman reminded that he had joined the proceedings in this case (c-520/21) to present “CJEU full and comprehensive picture, taking into account all aspects – including financial and economic – of the issue related to the settlement of the cost of capital, and this accession is the implementation of the financial supervision mandate set out in national law.

“After reviewing the opinion of the Advocate General, financial supervision upholds in its entirety the opinion expressed by the Chairman of the KNF before the CJEU on October 12, 2022.” – emphasized.

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The Commission stated that the position of the chairman of the KNF showed in particular that “the principle of the effectiveness of Directive 93/13 does not preclude the remuneration due to the bank for the use of the capital made available to the borrower in the event of the agreement’s collapse as a result of its abusive provisions, because the consequences of annulling the loan agreement – also if the bank is granted the possibility of demanding settlement for the long-term use by the consumer of the capital made available to him by the bank and allocating it to meet the consumer’s needs – they provide the consumer with protection and benefits (removing the entire currency risk from the consumer) going beyond the mere effects of the possible abusiveness of the exchange rate clause” .

“The problem to which the so-called franc disputes on the Polish financial market are actually leading is not related to the possible abusiveness of the exchange rate clause formulated in this or that way, but a significant strengthening of the Swiss franc against the zloty” – added.

The KNF talks about free credit and dramatic consequences

The position also emphasized that depriving banks of the possibility to demand such a settlement – i.e. granting the consumer a long-term “free loan” – will have “dramatic consequences from the point of view of all values ​​guarded by financial supervision – for the stability and security of the financial market, but also for its transparency, trust in it and from the point of view of the protection of all its participants”. “It is not the purpose of this communication to polemicize with the statements contained in the opinion of the Advocate General, in particular those relating to qualifying the settlement for the use of capital as a source of the bank’s ‘profit’, or justifying the proportionality of the +free credit+ sanction with references to consumer credit, which differs from mortgage loan with both economic parameters and the EU and national legal regime (consumer credit regulations directly provide for the sanction of +free credit+, which the mortgage loan regulations do not)” – indicated in Friday’s announcement.

The KNF is concerned about the stability of the financial system

The Commission added that “recognizing the value and importance of the future decision of the CJEU in case C-520/21, not only in relation to the legal and financial issues raised above, but also in relation to the need to seek proportionality and an appropriate balance between the protection of values ​​protected by Directive 93/ 13, and other values, such as fairness or stability of the financial system, the maintenance of which is in the public interest, the Polish financial supervision fully upholds the arguments contained in the position of the Chairman of the KNF presented at the hearing by the CJEU on October 12, 2022. It was assured that, regardless of the further development of the jurisprudence of national and EU courts, the KNF and the KNF Office, as before, “will continue to uphold the values ​​indicated in the statutory mandate of financial supervision, ensuring the proper functioning of the financial market, its stability, security and transparency and trust in the financial market, as well as ensuring the protection of the interests of all its participants.

Main photo source: Shutterstock



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