Poland’s Office of Competition and Consumer Protection (UOKiK) has for the first time published a standpoint which is material to a case. It concerns the ongoing dispute between consumers who took mortgages in Swiss francs and mBank, which issued the mortgages. The Authority has declared that the bank’s contract clause outlining its basis for changing interest rates is entirely prohibited, and has also indicated the possible fallout.
The amendment to the Act on competition and consumer protection extended to UOKiK the ability to present a court with standpoint material to a case, in cases concerning competition and consumer protection. This view enables the Authority to share with the court its knowledge and provide support in complex dispute settlement.
Acting at the request of the Municipal Consumer Ombudsman in Warsaw, UOKiK prepared its view on the dispute between 1247 mortgage holders with loans in Swiss francs and mBank. The case is being heard by the Court of Appeal in Łódź, and has been ongoing since 2010. Consumers in the class action lawsuit seek compensation due to the use of abusive clauses by mBank, which too generally and imprecisely defined the change to the interest rates.
Due to that lack of precision, borrowers were not able to verify the legitimacy of the interest rate changes. The Bank not only had the freedom to decide whether to change interest rates, but could also decide how to do it because the parameters that determine the change in interest rates were not precisely indicated. The risk of changes in interest rates based on mortgage contracts, some of which were concluded for up to 30 years, was transferred entirely to the consumer.
UOKiK President Marek Niechciał said of the standpoint, “we determined that the clause included in the loan contracts is entirely abusive. Thus it is not binding for consumers and, since that clause specifies the grounds for changing the interest rate, which is an important element of the contract, the clause in question may even result in the nullification of the entire contract.”
In practice, if a contract clause is determined to be abusive the enterprise may not reference it. Its only recourse is to propose an alternative solution in a contract annex, which the consumer is not bound to accept. Only the court hearing the case may introduce a new provision to replace the prohibited clause as a means to settling the case. In the case of the contracts with mBank, however, it is not possible, on the basis of existing provisions, to fill the “gap” with another clause, because the applicable regulations do not exist.
This led UOKiK to write in its standpoint that the mortgage contracts can be declared null and void, leaving mortgage holders to pay off the full mortgage at the moment they are aware of. The Financial Ombudsman in its report likewise pointed to the possibility of contract nullification.