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Office of Competition and Consumer Protection

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Excessively expensive loans with a fridge in the background - charges by the President of UOKiK

< previous | next > 26.08.2022

Excessively expensive loans with a fridge in the background - charges by the President of UOKiK
  • Consumer leaseback – that’s how Everest Finanse managed to circumvent the non-interest loan cost limits lowered during the pandemic.
  • As a result, amounts repayable by borrowers were much higher than provided for in legislation.
  • The President of UOKiK, Tomasz Chróstny, has charged the company with infringement of collective interests of consumers, which is subject to a fine in the amount equal to up to 10% of revenue.

When granting consumer loans, Everest Finanse SA, operating under the business name Bocian Pożyczki, intermediated in the conclusion of consumer leaseback contracts on behalf of a subsidiary operating under a similar name – Everest Finanse Sp. z o.o. sp. k. UOKiK received consumer complaints stating that together with annexes to loan contracts Everest Finanse SA provided them with lease contracts for household appliances, e.g. refrigerators, cookers and other electronics, such as TVs or smartphones, which they were then to sell to Everest Finanse sp. z o.o. sp. k. They emphasised that no one explained to them how these contracts worked and what would be their costs.

“I entered into a loan contract with Everest Finanse with a consumer leaseback contract. I received a loan in the total amount of PLN 2,000. However, the agreement contains provisions that I do not understand. Currently, despite my payments, the arrears amount to more than PLN 4,000. Interest rates are rising at a very fast pace. I am unable to even determine their amount,” said one of the consumers in her complaint.

Charge 1: excessively high loan costs

The President of UOKiK charged Everest Finanse SA with infringing the collective interests of consumers. The first charge concerns the collection of higher non-interest loan costs than permitted in applicable legislation from consumers. The limits of commissions and other fees collected from borrowers are laid down in the Act on Consumer Credit. During the pandemic, thanks to the initiative of the President of UOKiK, they were reduced even further. As a result, from 31 March 2020 to 30 June 2021 non-interest costs of consumer loan for loans lasting 30 days and longer could amount to a maximum of 15% plus 6% for each year of the duration of the loan – i.e. a maximum of 21% of the total amount of the loan for loans granted for a year. In addition, regardless of the loan duration, the level of non-interest costs could not exceed 45% of the entire consumer loan amount.

Meanwhile, consumers entered into three contracts with or via Everest Finanse: an annex to the loan contract increasing the amount of loan granted, a contract for the sale of household appliances or electronics, and a consumer leaseback contract for the use of that equipment. The lease entailed very high costs borne by the consumer, collected together with loan instalments.

Everest Finanse may have attempted to circumvent the law intended to protect consumers, so that they do not fall into a debt spiral during the difficult lockdown period. The company used leaseback contracts for household appliances, TVs and smartphones. In our opinion, the financing model based on two sources – a loan and a lease – could have been created artificially. As a result, amounts repayable by borrowers were much higher than provided for in legislation,” said Tomasz Chróstny, President of UOKiK.

Charge 2: absence of clear information about the contract prior to its execution

The second charge brought by the President of UOKiK against Everest Finanse SA concerns the lack of clear and unambiguous information on the contracts signed and their costs. According to complaints and the Office’s findings so far, most of the signed documents were viewed by consumers only on a tablet screen of the company’s representative, where they were to sign them with a stylus.

Consumers have an undisputed right to receive clear and unambiguous information about the contract prior its execution. Meanwhile, as a result of actions taken by Everest Finanse, consumers may not have been aware of what amounts of financing they obtained as a consumer loan and what amounts they obtained from the sale of the leased asset. In addition, the consumer lease generated very high costs for consumers. If they knew that they were overpaying for a loan, they might not have opted to sign it,” said Tomasz Chróstny, President of UOKiK

If these charges are substantiated, Everest Finanse SA may be fined up to 10% of its annual turnover.

Before you take out a loan …

  • Check if the loan company or the credit broker is listed in a register maintained by the Polish Financial Supervision Authority (KNF).
  • Read the provisions of the loan or lease contract carefully and check whether they are consistent with what a representative of the lending institution or the broker is saying. Read the terms and conditions of the contract and all appendices thereto very carefully.
  • Calculate the amount to be repaid and costs of the loan – both interest and costs arising from other commissions and fees. Remember that statutory limits do apply.

The maximum interest rates can be equal to twice the statutory interest rate calculated by adding 3.5 percentage points to the reference rate of the National Bank of Poland.

Non-interest costs may amount to a maximum of 25% of the total loan amount plus 30% for each year of the loan period, but in any case not more than 100% of the loan amount.

  • Remember that in lease contracts which do not provide for an obligation for the lessee to purchase its object, costs are not limited and may be significantly higher.
  • Compare the offers of different businesses. This is made easier by using the APR – annual percentage rate. It shows the loan cost specified as a percentage in relation to the total loan amount.
  • You can withdraw from the consumer loan contract within 14 days. In such a case, you are under an obligation to return interest for the period during which money were made available to you.
  • If you have any doubts or problems, please use free legal assistance.

Consumer Support:

Phone: 801 440 220 or 222 66 76 76 – consumer helpline
E-mail: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Consumer advocates – in your town or district
Financial Ombudsman - when a complaint has been rejected by a financial institution

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL

Attached files

 

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