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Anti-usury law – will it restore the “grey economy zone” on the payday loans market?

On June 25th 2019, the Council of Ministers resumed the decision to change the current assumptions of the amendment to the Consumer Credit Act as part of the recourse (re-examination of the case by the public authority) – instead of the announced tightening of the non-interest cost of consumer credit to a maximum of 45% per annum (20% of capital regardless of the financing period plus 25% of capital annually), the Council of Ministers took a step or even two steps further by introducing the limit of non-interest consumer credit costs at a maximum of 20% per annum (10% of capital irrespective of the financing period plus 10% of capital on an annual basis). Interestingly, the information on the introduction of a previously planned limit of 45% per annum was published by the Council of Ministers only 7 days earlier, that is, on 18th of June 2019.

The Council of Ministers does not indicate what caused the sudden change of one of the most important assumptions for the so-called anti-usury law.

In the opinion of the representatives of loan institutions, the announced regulation will not serve the purpose assumed by the Council of Ministers, that is, to increase consumer protection against imposing unreasonable costs on them by institutions providing loans and borrowings. On the contrary, market participants are surprised by the sudden change of project assumptions and are afraid that the introduction of such strict limits will result in unprofitability of the business, and thus liquidation of the entire short-term loans industry, which will result in the transfer of some loans to the so-called gray economy zone, unregulated and not providing adequate protection to consumers. As a justification, the loan institutions indicate that the Council of Ministers will eliminate the supply of loans without dealing with the issue of demand. Let’s remind – every year about 3 million Poles use consumer credits.

We encourage you to contact our Law Firm – our lawyers deal, among other things, with adapting the business model of consumer credit market entities to both the current and the proposed regulation.

Author team leader DKP Legal Piotr Putyra
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