Defending consumers in a system under pressure

The European Financial Congress in Sopot did not feature the industry’s most outspoken critic. In a candid conversation with XYZ, Tomasz Chróstny explains why he has lost control over a key piece of legislation. He points to the audacity of banks, whose lobbying may prove more effective than the protection of citizens’ interests.

Piotr Sobolewski, XYZ: Why did you lose this piece of legislation?

Tomasz Chróstny, President of the Office of Competition and Consumer Protection (UOKiK): It is the Prime Minister who decides which authority is granted the mandate to prepare a given draft law. He has discretion in this regard, and we accept that decision. The draft legislation on consumer credit will now be handled by the Ministry of Finance. Its challenging task will be to deliver on the objectives set out in the directive, in a context of high expectations from the market.

UOKiK underestimated the influence of financial institutions

What didn’t work?

This was a highly complex project that fundamentally changes the rules of the game. It strengthens consumer protection in a market that, over the past five years, has grown from PLN 95 billion (approx. EUR 22 billion) to more than PLN 200 billion (approx. EUR 46–47 billion), and which is a key area of activity for banks and lending companies.

During the work on the draft, we held dozens of meetings and dealt with a wide range of conflicting interests. We certainly underestimated the influence of financial institutions. Many of them sought to amend the regulations in ways more favorable to the sector, often at the expense of consumers, which we were not willing to accept. I am referring in particular to changes concerning the sanction for a free credit (SKD), creditworthiness assessments, advertising rules, and access to credit information.

And there were also conflicting interests within the government itself?

Of course. This applied, for example, to the calibration and scope of the SKD. Under pressure from proposals put forward by the Financial Supervision Authority (KNF), the Ministry of Finance, and banks, we proposed a model of proportionality in sanctions. This, in turn, met with opposition from the Ministry of Justice and the Financial Ombudsman, who argued that such a solution would lead to a heavier burden on the courts. For that reason, we wanted to resolve this issue at the level of the Standing Committee of the Council of Ministers. We saw this as the only way to reach an agreement.

The same applied to the issue of sharing information on receivables, which we also wanted to have confirmed by the Standing Committee – precisely to ensure that any change would be approved by the government. This is a common practice when there is no consensus in the legislative process.

On our side, we also failed to fully close off certain issues at the level of expectations at earlier stages of the process.

The authority was prepared to make concessions on several issues

So, in other words, telling the industry: “you won’t get anywhere anyway”?

Extensive public consultations and the changes already implemented show that we were willing to take substantive arguments into account. What was missing within the Authority’s team leading this project was sufficient contact with government partners who were raising technical or relatively minor comments. This applied, for example, to the removal of the EUR 100,000 financing cap [the consumer protection threshold under the act – ed.]. We had already received the green light for this solution at the stage of the government’s work-programming team; it was discussed and confirmed at that time. Following comments from the Government Legislation Centre (RCL), we were prepared to withdraw it from the version sent to the Standing Committee. In hindsight, I realize we could have done so earlier.

A similar situation applied to the Financial Ombudsman’s arguments regarding the possibility of using non-governmental institutions in consumer debt relief. We received those comments quite late, which is why we also intended to incorporate that change into the version submitted to the Standing Committee. The same applied to the reporting of receivables information: we were ready to amend the proposal so that the obligation would apply to credit information bureaus (BIG), or alternatively to abandon broader regulation of this area altogether.

What is important, however, is that from the very beginning of the Authority’s work on this draft legislation, we were confronted with a strong contest of interests from the financial sector, which – also through positions taken by institutions sympathetic to it – sought to influence the shape of the proposed regulations in a way favorable to itself. Now the Ministry of Finance will deal with this. We will follow these proceedings closely and hope to provide an opinion on the revised draft. We believe this can still be done within the planned timeframe.

Some parts of the sector wanted to defang the sanction for a free credit

Let me ask directly – does Poland run on lobbying?

That is an interesting question. It is certainly worth noting how certain narratives were promoted both in the consultation process and in the media space. The financial sector is undoubtedly a highly important part of the economy. At the same time, one must remember that the stability of the sector cannot be achieved at the expense of its participants.

In such significant legislative processes, it is essential to keep in mind that the responsibility of such institutions is built through clearly defined regulatory frameworks. The rights and interests of consumers cannot be sacrificed for the sake of business profit. Responsibility cannot be built on impunity. 

Are you referring to the sanction for a free credit (SKD)?

Naturally. Some parts of the sector are seeking to use this draft legislation to abolish the sanction for a free credit altogether, or to defang it in order to create only a veneer of accountability for financial institutions in cases of contractual errors or irregularities in the distribution of financial products. This is the most important element of the act – one that financial institutions will fight over.

It is worth noting that for 20 years the SKD was not considered a problem. It was only when banks failed to meet the challenge of finding an amicable solution to the Swiss franc mortgage issue that, against a backdrop of disregard for consumers, claims management firms began to emerge.

That is why today banks view the SKD as their greatest threat. It is also a challenge for the judiciary. Arguments referring to court efficiency, the right to a fair trial, risks to the stability of the banking sector, or even the resilience of the economy are being used in an attempt to ensure that accountability does not come with a price – even in individual consumer cases.

“The financial sector’s deep pockets influence the positions taken by participants in the legislative process”

Are there other examples of that influence? When analyzing the bill, one could see, for instance, identical comments from several organizations regarding changes to the credit information bureau market.

That is also a rather striking example of how attempts are made in Poland to push through legislation that serves particular interests. Unfortunately, it shows that the financial sector’s deep pockets can have an enormous influence on the positions presented by participants in the legislative process.

Consider the fact that one institution, despite our formal request, did not provide us with comments at the initial stage of work on the bill, when we were selecting the key national policy options. It then aggressively accused us of conducting public consultations merely for appearances’ sake. Yet, as you yourself have pointed out, those consultations were repeatedly prolonged by different groups, institutions, and organizations presenting essentially the same arguments.

We observed this process very clearly, although not necessarily all government ministries did.

Or perhaps it is simply easier to push through changes in consumer credit legislation because the average citizen does not really understand what this project is about? When banks lobby for changes to the bank tax, for example, any success would attract public attention, yet they still cannot persuade the ministry to change the rules.

We did not yield to lobbying. We envisaged certain solutions to preserve proportionality and ensure the reasonable application of sanctions, but not in order to defang them or abolish them altogether. It was not us who jokingly referred to the proposed proportionality mechanism as a “forgiven credit sanction” or a “half-forgiven credit sanction”. Those jokes came from banks and institutions surrounding the financial sector.

At no stage of the legislative process, however, was a credible alternative to this sanction put forward – one that would meet the requirements established by the case law of the Court of Justice of the European Union (CJEU). The issue is not only proportionality, but also effectiveness, as well as the sanction’s individual and deterrent character.

Banks and lending companies want this segment of the market to continue growing, but without facing consequences for mistakes or irregularities, even though the financial cost of those failings is ultimately borne by consumers. The final shape of the legislation is therefore, in reality, a question about the limits of accountability.

We are talking about a sector that, over decades, has not faced individual consequences in Poland for misconduct or irregularities. Who was held accountable for the currency options scandal, investment-linked insurance products, the distribution of high-risk corporate bonds, or foreign-currency mortgages? Did anyone at the level of management boards – those who approved these decisions or even the associated sales targets – ever face consequences?

That absence of accountability breeds a sense of impunity. Today, it is presented under the guise of safeguarding the stability of the financial sector and strengthening the economy’s financial resilience.

“The antagonism fostered by banks is an attempt to protect their own interests”

Court proceedings related to cases such as GetBack are still ongoing. In the case of Swiss franc mortgages, however, one could easily argue that this was not an isolated incident, given that virtually the entire sector was selling such loans.

The prevailing mindset was: if they are selling these products and making money from them, then we must do the same. Today, the debate is framed as though predatory claims-management firms are trying to undermine the stability and security of the financial sector.

It is a situation similar to when banks sought to pit zloty mortgage borrowers against Swiss franc mortgage borrowers, hoping that the former would turn against the latter. That eventually evolved into attempts to challenge loans based on the WIBOR benchmark rate.

This kind of antagonism on the part of banks is, in reality, an attempt to defend their own interests.

So you do not like banks very much?

Quite the opposite. I believe banking is a crucial sector. It has enormous growth potential in Poland and plays an important role in our economy. It is highly modern, dynamic, and convenient for its customers.

I would like to see the financial sector become more responsible and transparent – more willing to address problems than to sweep them under the rug. That is what we care about at UOKiK. We do not intend to defend the sector uncritically, as some do, invoking “stability” and “resilience” at every turn. Our goal is to ensure that the legal framework supports the development of a responsible and modern financial sector in Poland.

Unfortunately, there is still a mindset within parts of the banking industry that this would be a wonderful business if it were not for those troublesome consumers.

“When accountability was not enforced, the social costs of misconduct were extremely high”

Are banks feeling the heat because of the recent SKD ruling? We are talking about Case C-744/24, in which the CJEU took a critical view of financing commissions through credit.

The failure to resolve Swiss franc mortgage disputes amicably allowed claims-management firms to flourish. For years, we as a country invested in building civil society and wanted consumers to be supported by NGOs. In the consumer-protection sphere, however, we did not fully succeed in achieving that goal. As a result, this space was largely occupied by legal professionals.

That should not lead us to abandon further efforts to develop mechanisms that promote accountability and fairness in contracts drafted by businesses. The case law of the CJEU requires that, in situations of this kind, the consequences should not be limited to administrative penalties alone. They must also provide meaningful redress and tangible improvements for consumers who have suffered harm.

All right, but the economy needs banks – and so does the state. Does that not matter?

Of course it matters. It is difficult to imagine a modern economy without a financial sector. At the same time, we should remember the experiences of Poland and of other countries, such as Iceland and Italy. Whenever accountability was not enforced and financial institutions were allowed too much latitude, the eventual social costs of misconduct and irregularities proved extremely high.

Society ultimately paid the price for allowing financial institutions to take excessive risks and engage in unfair practices. We need to build a fair set of rules and hold banks accountable. They are not always capable of imposing that accountability on themselves.

UOKiK joins the Financial Ombudsman’s appeal

Are you worried about the direction the draft consumer credit law might take?

We are waiting for the revised version. We hope that, as an institution responsible for protecting collective consumer interests, we will be able to issue an opinion on the shape of the draft law, and that this opinion will be duly and thoroughly taken into account.

So will UOKiK act as a critical arbiter in this process?

We are a rational and experienced participant in the legislative process. We are aware that the market perspective must be taken into account; however, the primary objective of the transposed directive remains the strengthening of consumer protection.

On June 1, in an article published in our outlet, the Financial Ombudsman encouraged banks to reach settlements with customers already at the complaint stage – for example, when customers seek a refund of interest related to commissions financed through credit. What is UOKiK’s position on this?

Dialogue and amicable solutions are always preferable to confrontation, as the Swiss franc mortgage cases have also demonstrated. From our perspective, it is essential that banks implement appropriate mechanisms for the credit products they offer as quickly as possible. In the case of loans that have already been repaid, the complaints procedure is the most effective way to resolve the issue. We support this appeal.

“Banks are aware of the potential consequences of the ruling on financing commissions”

Perhaps it would be better to stay quiet and not talk about it?

I had the opportunity to discuss this judgment with representatives of the sector. Banks are very aware of the potential implications of this ruling. It is also being analyzed by some public institutions, such as the Polish Financial Supervision Authority (KNF). We are likewise assessing its potential consequences ourselves. The key issue is to examine all relevant aspects.

Should the sector or the KNF come forward with a proposal for settling existing portfolios?

I have no doubt that, in relation to the sanction for a free credit (SKD), this ruling will become an important element in the legislative debate on the shape of the draft law.

So could the Ministry of Finance resolve this issue in the draft it has just taken over?

I do not know whether that will be the case, but I am certain that banks and lending companies will seek to push for such solutions. Changes of this kind in the law could reduce the impact of the ruling at the expense of consumer interests.

UOKiK expects a revised draft law in the coming weeks

Do we actually need to implement the directive on time, i.e. by 20 November?

Above all, ongoing cooperation with the European Commission is key. I hope we will see a revised draft law in the coming weeks. I suspect that some of the changes will already be agreed before the draft is officially published. Our understandings with the Commission assumed that the law would be adopted by the end of the year, but if the work drags on too much, the Commission may lose patience.

So your arrangements with the Commission assumed you would not meet the 20 November deadline?

We were in constant contact with the Commission. In response to the Commission’s letter asking about the progress of work, we presented what had already been achieved at that point, as well as a timeline indicating that the provisions would be ready by the end of the year at the latest. We would have met that deadline.

In your comments on the process, you note that this is not only our problem, as work is still ongoing in 20 countries.

Of course. These are very difficult and complex legal changes. Moreover, delays in transposing EU law also affect other legislative acts – for example, the Ministry of Finance currently has seven directives that have not been implemented on time. At UOKiK, we do not have such backlogs. We are currently continuing work on amendments related to greenwashing, and that process is progressing very smoothly.

Why are we falling behind, then?

In the implementation of many legal acts, we are on track – especially when the changes are not controversial and do not meet such strong resistance from stakeholders as the consumer credit law does. Moreover, in this case we have seen two opposing positions. On the one hand, we were warned against overregulation; on the other, there was readiness to introduce broader changes addressing additional issues, such as limiting BIK’s monopoly in the credit information market.

The government was concerned about the implications of adopting a standard mortgage contract in the legislative process

How is your cooperation with the government? Beyond this particular law, there is also the issue of a model mortgage contract with a variable-rate tranche or periodically fixed interest rate. You ultimately failed to push these changes through at government level, and UOKiK eventually abandoned them.

A solution of a normative nature is not subject to review by the Court of Justice of the EU. A well-designed framework, properly consulted with the market, in our view could have created a model that would be safe for both consumers and businesses. We concluded that it was reasonable for the state to be involved in this process.

The Ministry of Finance and the Ministry of Justice were concerned that any possible evolution in the case law of the CJEU could expose the state to financial liability arising from such a legal solution. We remained convinced until the end that only in this way could we address risks that would not be covered by industry self-regulation.

Do you not believe in self-regulation?

In many cases, good practices and self-regulation deliver excellent results. For example, in the area of marking commercial content on social media, we jointly developed very good guidelines with the industry, which have become a standard incorporated into contracts used by leading marketing agencies.

However, there are limits to self-regulation. In the case of a contract template developed through self-regulation, we should remember that no matter how many professors sign off on a given solution, every judge will still assess such contracts according to their own experience and the current case law. If it turns out that a contract heavily favors one party – for example, clearly shifting risks onto the entrepreneur while protecting the consumer to a much lesser extent – then this asymmetry of rights takes on a practical dimension that we refer to as unfair contract terms (abusiveness).

Self-regulation in the sector cannot be asymmetrical

So are you saying “no” to this initiative?

I value any mechanism that ensures consumer rights and interests, improves the safety of commercial transactions, and strengthens the stability of contracts – especially mortgage agreements. Initiatives of this kind should be supported. Self-regulation can improve the safety of concluding such agreements. The condition is that it cannot be designed to asymmetrically protect only one side’s risks, namely those of banks. If that were the case, we would have a problem.

All right, but if this were a government-led solution, one could always argue that any future adjustments – aligning the model with new market practices or new products – would be extremely difficult without broad government support.

That is why, already during the drafting stage, we spoke with the industry to prevent practices such as cross-selling [tying arrangements – ed.] and to ensure stability and transparency in contractual terms. A mortgage agreement is not something that undergoes radical changes over time.

However, the value of this project lay in the possibility of subjecting it to broad public consultation. Whether it would later take the form of a statute or a regulation – which would allow for more flexibility and would not be continuously subject to CJEU review – was not the key issue. I would even go further: even if, after the consultation phase, there was no willingness to continue and implement it as generally binding law, we would still have a model contract that had gone through extensive public and stakeholder scrutiny. That alone would mitigate risk far more effectively than any form of self-regulation.

“Banks are not particularly eager to engage in financing innovation and the SME sector”

There has been quite a bit of criticism in this conversation. Bankers also complain a lot, for example about the proceedings you are conducting regarding unauthorized transactions. But I understand that, in the end, everything will turn out well for the sector?

That depends on the sector itself – whether it chooses to pursue fairness and transparency. I believe the sector is now much more aware that consumers are backed by professional entities and strong public institutions.

At the same time, the sector complains about regulatory and tax burdens, yet there is no evidence that these have significantly weakened its financial results. The sector is currently dealing with excess liquidity, which is a comfortable position. Today, revenues from government bonds, deposits held at the National Bank of Poland, as well as consumer and mortgage lending, are sufficiently attractive that financing innovation or the SME sector are not always areas in which banks are strongly engaged.

I often hear that there simply isn’t demand from companies. Is that not true?

To some extent, it is true that Polish small and medium-sized enterprises tend to apply for bank credit less frequently than their European counterparts – something the National Bank of Poland once described as “credit aversion.” But what is discouraging SMEs? It is quite possible that previous experiences, a lack of partnership in the relationship, and a broader lack of openness from the sector are contributing factors.

UOKiK is not the last bastion of justice in the sector

You mentioned strong public institutions standing on the side of consumers. I assume you are mainly referring to UOKiK? Are you the only real defender of customers?

Absolutely not. I have no doubt that, for example, the Ministry of Justice is working to make court proceedings more efficient, and the Financial Ombudsman – thanks to a much larger budget than in the past— is increasingly involved in assisting clients in the financial market. This is something that should be acknowledged.

There are areas where cooperation with certain institutions works very well, and others – such as in the case of the Polish Financial Supervision Authority (KNF) – where tensions arise between consumer interests and financial stability. When is the financial sector most stable? When it has high capital buffers, and it has high capital buffers when it generates strong profits. This creates differences in perspective and sensitivity.

I have great respect for the KNF, for the competence and commitment of its team. I am aware that in recent months there have been cases where we have taken different, sometimes opposing, positions. That is natural. What matters is mutual respect and continued cooperation – we have many areas where it works exceptionally well.

Do you feel a shadow over your relations with the government? You were appointed by the previous administration, similarly to, for example, the Governor of the National Bank of Poland.

I have a strong sense of mission and responsibility, as well as independence and non-partisanship. I derive great satisfaction from the impact we have on the economy and on business practices. We protect the weakest market participants while also working to eliminate unfair behaviors and market mechanisms. We conduct very interesting and complex proceedings. Over the years, we can see how businesses change their practices.

There are areas of the market that were outside our scope for decades, such as the art market or the labor market. We can see that these interventions are changing the Polish economy for the better.

Naturally, we would like to enjoy much greater goodwill from the government – especially in terms of access to tools and information, legislative changes that would accelerate enforcement, and ultimately a higher budget, particularly for salaries and investment. At the same time, we are well aware that in UOKiK’s history there have been periods of stronger and weaker governmental support, both regulatory and financial. We accept this with humility and simply do our work.

Key Takeaways

1. Heavy lobbying by the financial sector has paralyzed UOKiK’s work on the draft consumer credit law. President Tomasz Chróstny admits that officials underestimated the determination of banks, which exploited divisions within the government to dilute consumer protection. As a result, control over a market worth billions of zlotys has shifted to the Ministry of Finance. The ministry will now face the same pressure from financial institutions and organizations sympathetic to them.
2. The sanction for a free credit is becoming a new flashpoint. Banks, alarmed by an unfavorable CJEU ruling on the financing of commissions, are seeking to effectively “defang” this regulation. They argue that it could destabilize the sector and paralyze the courts, hoping to prompt the government to limit the liability of financial institutions. UOKiK warns, however, that such changes would merely create the appearance of accountability for errors in contracts.
3. Institutional reluctance to assume responsibility is blocking systemic solutions designed to protect customers. The failure of work on a state-backed model mortgage contract illustrates ministries’ concerns over the legal consequences of future CJEU rulings. The UOKiK president is also skeptical about the credibility of self-regulation in the sector, pointing to a history of impunity among management boards in cases such as GetBack or unit-linked insurance policies. Banks, flush with liquidity, prefer to earn returns on government bonds rather than actively finance SMEs and innovation.