Poland to tighten anti-usury law

Recently, the Ministry of Justice came forward with a draft law introducing new anti-usury measures. The draft law is currently under the process of evaluation by relevant authorities, before it is proceeded by the Polish Parliament.

The proposed amendments provide for significant changes in Poland's civil and penal codes, as well as banking law and consumer loan legislation, with a view to “curb the practices associated with the scourge of usurious loans”.

Some of the key changes include:

• Introducing the Polish Financial Supervision Authority’s (“PFSA”) oversight over lending companies and credit intermediaries.
• Tightening the limit of non-interest loan caps. New stricter limits would apply to (i) consumer loans, (ii) C2C loans, and (iii) B2C credits and cash loans offered by banks.
• Exempting certain banks from applying PFSA’s Recommendation T on good practices with regard to risk management of retail credit exposures. This is to streamline the procedure for obtaining credits or loans from so-called “material banks” (as defined in Banking Law).
• Introducing new usury offence types, which are to be punished with imprisonment of 3 months to 5 years.
• Strengthening the provisions regarding collateral.

The PFSA has voiced concerns over some of the amendments. For example, it emphasised that based on the experience of other countries, excessive penalisation of the short-term loan market contributed to a considerable reduction of the overall number of lending companies and resulted in the growth of the grey market. The PFSA has also negatively assessed the idea of the “carve- out” from Recommendation T and oversight over lending companies as proposed by the draft law.

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