Statement of the Financial Stability Committee on the risk associated with a free credit sanction
Warsaw, 25 March 2025
Annex to Resolution No. 79/2025 of the Financial Stability Committee of 21 March 2025
The Financial Stability Committee, acting in the scope of macroprudential supervision, hereinafter referred to as “the Committee”, identified systemic risk in the domestic financial system associated with the application of a free credit sanction – a right defined in Article 45 of the Act on Consumer Credit[1] – hereinafter referred to as the “FCS”.
The free credit sanction consists in the return to the borrower of the amount of interest and other costs related to the credit agreement and the absence of an obligation to pay these costs until the end of the agreement. This is to be applied in the case of a breach by the lender of the statutory requirements regarding the terms of granting the credit and the content of the credit agreement.
The primary purpose of introducing the FCS into the legal order is protection of the consumer-borrower against the negative economic consequences of a decision to enter into a credit commitment in the event of a breach of statutory requirements by the lender. The Committee fully agrees with the need to adequately safeguard the interests of consumers who enter into agreements with professional entities such as financial institutions. It also considers that it is justified to sanction lenders who do not comply with the statutory provisions in this regard.
However, at the same time the Committee points out that while the breaches mentioned in the Act on Consumer Credit vary in nature and importance, the level of the sanction itself is not gradated. The lack of sanction gradation creates a system of incentives encouraging the instrumental use of the benefits of the FCS and the undermining of credit agreements regardless of whether the breach has economic consequences for the borrower or not.
Moreover, it creates favourable conditions for the development of claims practices by entities specialising in this type of activity. The main beneficiaries of the rights provided for in the Act will no longer be potentially affected consumers, but will be entities focused on maximising their own profits. Such activity harms the actual welfare of consumers, weakens confidence in the banking sector, and leads to a distortion of the legal and economic conditions for conducting business in the financial market.
In the opinion of the Committee, the current uncertainty regarding the legal and regulatory environment generates systemic risk, which may significantly affect the situation of the banking sector, and consequently may also cause a reduction in the supply of financial services, particularly for households. The rationale behind the viewpoint of the Committee stems from a concern to maintain balance between the protection of banks’ customers and stability of the financial system.
With this risk in mind, the Committee recognises the need to significantly reduce the uncertainty regarding the legal and regulatory environment in which the financial system operates by taking into account the principle of proportionality – both at the level of the applicable regulations and their interpretation and application – in the field of consumer protection.
The Committee takes the view that it is necessary to develop solutions to ensure balance in the relations between borrowers and lenders. The ongoing work on the draft of the new Act on Consumer Credit should lead to regulating the free credit sanction, not only as an effective and deterrent institution, but also proportionate to the scale of the breaches. The new regulations should also limit the possibility of abusing the legal provisions serving the protection of consumers by other, professional stakeholder groups. In the Committee’s view, balancing the interests of all financial market participants is essential for the stable functioning and development of the financial system.
[1] Act of 12 May 2011 on Consumer Credit (Journal of Laws of 2024, item 1497, and of 2025, item 146).