On 13 February 2025, Court of Justice of the European Union (TEU) issued a decision which could importantly affect the situation of millions of Polish borrowers. judgement concerns information obligations of banks to customers and opens the way to the so-called. free credit sanctions if they are breached.
Information obligations of banks under the eye of the EUSF
The CJEU ruled that if a bank fails to fulfil its work to inform the consumer, it may be deprived of its right to charge interest. This applies in peculiar to cases where the infringement affects the consumer’s ability to measure the scope of its obligation. This means that unclear or incomplete information banks may have serious consequences for these institutions.
In practice, if the bank does not supply the consumer with complete and understandable information on the terms of the credit, the consumer has the right to request designation of the contract as ‘free credit’. This means that the borrower is obliged to repay only the capital borrowed, without additional costs specified as interest, commissions or handling charges.
Sanctions of free credit – what does it mean for consumers?
Free debt sanction it is simply a consumer protection tool that allows the repayment of credit capital only, without any additional costs. This is possible in situations where the bank infringes consumer credit rules, in peculiar as regards information obligations.
In practice, this means that if the bank incorrectly informs the consumer of the terms of the contract or applies unclear provisions, the consumer has the right to benefit from this sanction. As a result, credit becomes completely free, which importantly reduces the financial burden on the borrower.
According to legal counsel Wojciech Bochenk, the judgement of the EUSEC will be of crucial importance to close 18 million active loans in Poland, whose full value is estimated at around PLN 190 billion.
This means that many borrowers who feel affected by unclear or incomplete information provided by banks may now exercise their rights by court, demanding that their contracts be regarded as "free loans".
How to benefit from free credit sanctions?
In order to benefit from free credit sanctions, the consumer should:
- Analyze the credit agreement for possible breaches of information obligations by the bank.
- Collection of documentation confirming the deficiency or confusion of information provided by the bank.
- To consult a lawyer specialising in consumer law to measure the situation and take appropriate legal steps.
It is worth noting that each case is individual and so a thorough analysis of a circumstantial credit agreement is necessary.
The most fresh judgement of the TEU represents an crucial step towards strengthening consumer protection in the financial services market. Banks will gotta pay peculiar attention to transparency and completeness of information transferred to customers to avoid possible sanctions. In turn, borrowers get an additional tool to defend their rights in the event of unfair practices by financial institutions.
Read more:
Free credit becomes a real option for millions of Poles
