Safe purchase for installments, "movies" without extortion, no more receipt of flats for unpaid loans of multiple lower amounts, additional cost limits and severe penalties for usury – this is a package of groundbreaking changes in the law that the Ministry of Justice has prepared. The draft anti-trust bill is today (18 June 2019) adopted by the Council of Ministers.
- The project prevents the abuse of the strong position of various loan companies towards weaker citizens. Very often, they are seniors, pensioners, but also other people whose current needs are used to impose various kinds of fees and interest, which cannot be described other than as draconian," said Prime Minister Mateusz Morawiecki at a press conference after the government meeting.
The government's far-reaching changes in law consistently limit the ability to enforce higher borrowing costs than those which have been very precisely recorded in the draft
Justice Minister Attorney General Zbigniew Ziobro stressed that the government's far-reaching changes in law consistently limit the ability to enforce higher borrowing costs than those which were very precisely recorded in the project.
In order to illustrate the loan shark business to which the Ministry of Justice is counteracting, Zbigniew Ziobro gave an example of a recent complaint he made to the Supreme Court. The case concerned a person who took a loan of 15,000 PLN, She had to pay a year.
730% the cost of the loan, which has evolved to a charge of more than one million Gold.
- Such pathologies are involved in Poland one thousand Poles. On the agenda, our compatriots are misled by the fact that the nominal amount of interest on loans is relatively low. And in fact, the hidden costs - related to various margins, commissions, fees, necessary insurance - are so large that the real interest rate reaches several hundred percent – said Minister Zbigniew Ziobro.
Changes in law are intended to effectively protect Poles from the scourge of loan sharks and abuses of loan companies. They are to end the use of ignorance and client confidence. They are to stop being preyed on by consters on poverty and the tragedy of the lives of people forced to borrow from usury interest.
1 The new rules end up with freedom to set additional payment fees. It will no longer be possible to add commissions, margins, fees for the submission or processing of an application or compulsory insurance without limitation, leading to the fact that unconscious customers are often unable to repay an allegedly attractive interest-bearing loan. It turns out, that despite the attractive offer of "zero interest", the newly purchased equipment must pay much more than the price on the label.
The maximum amount of additional fees for installment purchases will be set at 45% the amount of the loan per year. And if we decide to spread the instalments to 6 months, this additional costs will not exceed 32.5%
The interest limit will remain at current level, i.e. maximum 10% on a yearly basis.
2 Restrictionary rules will apply to short-term loans for small amounts, i.e. short-term loans. Today, customers, encouraged by moderate nominal interest rates, often do not realize how much they will actually have to pay. The costs of the loan, such as the purchase of instalments, are increased by pre-emptive commissions, margins or fees.
The limit of additional fees for "minutes" will be radically limited to 45% the amount of the loan per year. However, with a loan for a month, this limit will only be 22%
The interest limit on the loan itself has so far been up to 10% on a yearly basis.
3 There will be no more taking away homes and homes, depriving the entire life of people who have not paid off a loan of many times lower. The new law will introduce strict limits on the collateral laid down.
The loan security shall not exceed the amount borrowed plus a maximum of 45% It will not be acceptable to request the transfer of ownership of the property to cover the liabilities incurred. The possibility of carrying out bailouts from the apartment will also be eliminated if the amount of debt does not exceed 5% the value of the house or premises.
4 It will end with the freedom to set additional fees also in the case of loans granted on the basis of civil and legal contracts, i.e. borrowing from a private person. Today, raising extra fees is a common method of loan sharks to deprive people of their wealth. The borrowers, who sign long and complicated contracts, often fail to realize the additional costs they incur.
In the case of a bank consumer loan this is a loan to 255,550 PLN additional fees granted under the Consumer Credit Act shall not exceed 45% the amount of the loan per year. Maximum interest is 10% on a yearly basis. This limit will also apply to a bank loan for a higher amount.
With a loan granted under a civil-law contract, the additional charge limit will be 25% the amount borrowed.
5 The new rules will clearly define which loans are of a usury nature, and prison will be threatened for breaking the law. They will end up with a rule that made the pursuit of a loan shark dependent on whether he knew that the person taking out a loan is “in a state of distress”, i.e. in a difficult life situation and dramatically needs money to provide himself with basic living conditions, such as food, medicines, bills. This recognition of the law has so far been the cause of the impunity of loan sharks.
The project provides for imprisonment from 3 months to 5 years for any person who, in exchange for a cash benefit arising, inter alia, from a loan agreement, requires him or her to pay an additional cost twice as high as the maximum or requires him or her to pay an interest rate twice as high as the maximum.
Poland will join countries that fight against usury strictly and effectively. Among them are Austria and Canada, where for the provision of usury loans can be found on 5 years to prison. In Germany, fines for usury go to 10 years of imprisonment and in the United States – even 20 years.