Loan company ripped off customers? Will it pay a fine for that?

Company LoanMewhich deals with granting loans, was found under the microscope of the Office of Competition and Consumer ProtectionThe reason for this was the numerous complaints regarding irregularities in loan settlements and refinancing mechanisms. Consumers reported problems with the lack of refund of proportional fees for early repayment of liabilities and charging high non-interest costs, which often led to significant debt. As a result, the President of the Office of Competition and Consumer Protection imposed on LoanMe a fine of over PLN 557,047.

Refund on early repayment

Pursuant to Article 49 of the Consumer Credit Act, if the borrower repays his obligation before the deadline, the financial institution is obliged to return a proportional part of the fees and commissions charged. The Court of Justice of the EU confirmed this interpretation of the regulations in September 2019. However, LoanMe refused to refund consumers who repaid their loans before the CJEU ruling, arguing that previous legal regulations did not require it. Such a practice, according to the UOKiK, could discourage many borrowers from pursuing their rights.

Following the CJEU judgment, there are no doubts as to how to interpret the provisions that apply to contracts concluded after the entry into force of the Consumer Credit Act, i.e. from 18 December 2011.

– said Tomasz Chróstny, President of the Office of Competition and Consumer Protection

Loan refinancing mechanism

LoanMe also used a controversial loan refinancing mechanism known as “rolling”. It consisted of granting further loans without the consumer’s express consent. A client who had an active loan would receive a new loan from a cooperating company, and then LoanMe would re-grant the loan to pay off the new obligation. Each of these loans was charged with additional non-interest costs, which often led to significantly exceeding the limits specified in the regulations and customers falling into a debt spiral.

If refinancing were done in accordance with the regulations, a consumer who did not repay a loan within 120 days and took out another one from the same entity would be protected. All fees charged during this time must be within the limit of non-interest costs charged on the amount of the first loan.

– added the head of the Office of Competition and Consumer Protection

The Office of Competition and Consumer Protection reminds

Have you paid off your loan early? Here are your rights:

• Anyone who has a consumer loan can repay it early. In such a situation, the lender must proportionally reduce all the costs of the loan (e.g. fees, commissions, insurance costs) and pass them on to the consumer.

• The amount to be refunded should be calculated using the straight-line method. This involves the financial institution dividing all non-interest costs by the number of calendar days the agreement was supposed to be in effect. The result is multiplied by the number of days by which the credit period was shortened. This amount should be returned to the consumer.

• The Office of Competition and Consumer Protection has prepared a loan calculator that will help you calculate the approximate amount to be repaid using the straight-line method.

• You can apply for a refund of unsettled parts of fees for a previously repaid consumer credit or loan if you concluded the agreement after the entry into force of the Consumer Credit Act, i.e. after 18 December 2011. The limitation period for claims is 10 years for repayments made before 9 July 2018 and 6 years for repayments made after that date.

• To recover the funds owed, file a complaint. You can use a ready-made form and send it to the financial institution that granted you the loan or consumer credit.

• For agreements concluded before December 18, 2022, the limits on non-interest credit costs from the Consumer Credit Act apply and depend on the length of the credit period. They can amount to a maximum of 25% of the borrowed amount plus 30% for each year of credit, but not more than 100% of the credit.

• Currently, following the amendment to the Anti-Usury Act, non-interest loan costs cannot be higher than 45% of the total loan amount.

The decision of the President of the Office of Competition and Consumer Protection to impose a fine on the LoanMe company is not final. The entrepreneur has the right to appeal. Additional information can be found in the content of the decision.