UOKiK conducts proceeding against a loan company
The Office of Competition and Consumer Protection (UOKiK) has received many complaints and inquiries about Profi Credit Polska. Information from consumers suggests the lender charged fees exceeding the borrowed amount and disbursed subsequent loans without the knowledge of consumers.
The UOKiK’s doubts are caused by the insurance fee which is often higher than the loan amount. The Authority charged Profi Credit Polska with allegations. As UOKiK explained, Profi Credit Polska added a life insurance premium exceeding the value of borrowed money to a loan. A significant part of the insurance premium was transferred to Profi Credit Polska as a remuneration for handling the policy. Moreover, with the debt repayment, the sum insured might have decreased. In addition, the agreement included a provision according to which Profi Credit Polska disbursed subsequent loans to consumers, even though they did not apply for them, and charged them again for life insurance. The company did not verify whether they were able to pay the instalments.
“Consumers were surprised by their debts and payment requests. The company announced it had ceased the practices including subsequent disbursements and life insurance charges. Nevertheless, many contracts are still in force” - says Marek Niechciał, the President of UOKiK.
The President of UOKiK is conducting proceedings against Profi Credit Polska. The accusations of the Authority pertain to:
- too high insurance fees;
- disbursement of subsequent loans without the knowledge of consumers and without assessing their repayment capacity;
- requests to pay the entire insurance premium and interest in the maximum amount instead of the lower one specified in the agreement, if the agreement was terminated due to the client not paying instalments;
- debt collection fees without specified rules for their application, which could significantly increase the amount to be paid.
The explanatory proceedings are under way in case of Compensa TU na Życie SA Vienna Insurance Group and Generali Życie TU. The Authority wants to explain rules for calculating life insurance premiums. The practices of Profi Credit Polska and insurers have been notified to the Polish Financial Supervision Authority and the District Prosecutor's Office in Bielsko-Biała, which is conducting an investigation on this matter.