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European Court of Justice opinion on foreign currency loans

European Court of Justice opinion on foreign currency loans

Date25 May 2023

Following the opinion recently delivered by the European Court of Justice (ECJ), the Polish Banking Supervision Commission KNF has warned of “dramatic consequences for the banking sector” if private consumers would be granted a “free loan”.

The long-running dispute over foreign currency loans, especially mortgage loans in Swiss francs, has now reached a new level with an opinion issued by the European Court of Justice (ECJ). In that opinion, banks are denied the right to charge additional fees for loans that have been declared invalid. Consumers, on the other hand, are granted the right to assert claims against the banks beyond the reimbursement of monetary benefits. At stake are thousands of mortgages loans, primarily in Swiss francs, which have been declared invalid by Polish courts in recent years due to illegal clauses. It should be noted that since 2008, some 950 000 Polish borrowers have taken out Swiss franc mortgages in Polish banks to purchase property. The banks in Poland paid out the loans in złoty. The loan installments, on the other hand, were denominated in Swiss francs and settled in Polish złoty. Initially, Polish borrowers derived great financial advantage from this, but this changed fundamentally when the Swiss franc became more expensive in 2015. The first borrowers took legal action and at the end of 2019, the European Court of Justice (ECJ) backed them up. It ruled that a contract concluded under EU law can become invalid due to individual unfair terms. With the ECJ ruling, it is possible to conclude a new loan agreement in złoty or to amend the existing franc agreement. The decision on this is to be made by the Polish courts on a case-by-case basis. In the protracted litigation, the courts have already declared such credit agreements invalid in individual cases. At that point, the borrower has to pay back the received capital to the bank, and the bank reimbursed him all charged installments and fees plus interest.

Source: Wirtschafts-Markt Polen (03-2023 Issue 324)

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Elżbieta Naron

Head of Customer Relationships
Department / Senior Manager
getsix® Group
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