CJEU Case C-744/24: Prohibition on Interest on Financed Loan Costs and New Risks for SKD 

On 23 April 2026 the Court of Justice of the European Union (CJEU) delivered its judgment in the Polish case C-744/24 (Bank Polska Kasa Opieki), and it is already reshaping how Polish courts decide disputes over the so-called free credit sanction (sankcja kredytu darmowego, SKD).

The Court confirmed that a lender may finance the costs of credit, but may not charge interest on the part of the amount that covers those costs and is never actually paid out to the consumer. For banks, lending institutions and fintech lenders, this calls for an urgent review of product structures and credit documentation. This update explains what has changed, who is affected and what you should do now.

CJEU on interest on loan costs: new risk of penalties for interest-free loans

The CJEU separated two issues that the Polish market had long treated as one. Financing credit costs (such as a commission or an insurance premium) is permissible. Directive 2008/48/EC (the Consumer Credit Directive) does not limit the types of costs a lender may impose on a consumer.

Charging interest on those credited costs, however, is contrary to EU law: the “total amount of credit” and the “amount of the drawdown” cover only the funds actually made available to the consumer, not the sums earmarked to cover the cost of granting the credit. Applying an interest rate to money the consumer never receives, the Court held, undermines the transparency of the market.

The Court also confirmed that an insurance premium whose purchase reduces the borrowing rate is an ancillary service that must be included in the annual percentage rate of charge (APRC; in Polish, RRSO). Because the new Directive 2023/2225 (CCD II) contains identical rules on these points, the CJEU’s position will remain relevant once it is implemented into Polish law.

The effects are already visible in the courts. Case law is beginning to shift in favour of consumers, particularly before the Regional Court in Warsaw, which hears appeals against first-instance judgments unfavourable to borrowers.

In case no. XXVII Ca 3105/25 (judgment of 27 April 2026), for example, the court held that the absolute invalidity of provisions imposing interest on an amount exceeding the total amount of credit results in the contract incorrectly stating the borrowing rate (Article 30(1)(6) of the Consumer Credit Act, the “u.k.k.”), the APRC and the total amount payable (Article 30(1)(7) u.k.k.), which in turn opens the door to the free credit sanction (Article 45 u.k.k.).

There is, however, no revolution yet. A number of courts continue to dismiss claims, holding, including by reference to another CJEU judgment, C-472/23 (Lexitor) of 13 February 2025, that merely stating parameters calculated on the basis of the contract terms does not breach the information obligation.

The banking sector emphasises that there is no automatism: in its view, charging interest on non-interest costs does not in itself amount to a breach triggering the sanction. At this stage, the outcome of an individual case can be hard to predict.

Free Credit Sanction: Who Is at Risk of SKD in the Consumer Finance Market?

• banks and lending institutions (instytucje pożyczkowe) granting consumer credit;
• fintech lenders and buy-now-pay-later (BNPL) providers that finance commissions, fees or insurance;
• entities purchasing consumer receivables, whether pursuing or defending SKD claims;
• foreign investors and groups (including from the UK and the US) planning to enter the Polish consumer finance market.

SKD Following the CJEU Ruling: Key Risks for Lenders

1. Review your credit product structures, check that interest is charged only on the amount actually disbursed to the consumer, not on credited costs.
2. Check and correct your documentation, contract templates, the standard information form (formularz informacyjny) and the way the borrowing rate, APRC and total amount payable are presented.
3. Re-examine your APRC methodology, including the treatment of insurance premiums that condition more favourable credit terms.
4. Assess your portfolio’s exposure to SKD claims and prepare a litigation strategy, including against assignees buying up receivables on a mass scale.
5. Watch the next rulings closely: on 11 June 2026 the Advocate General of the CJEU, Dean Spielmann, delivered his opinion in another Polish case, C-831/24, Machski (referred by the District Court in Białystok), addressing among other things whether courts must examine breaches of their own motion and the proportionality of the sanction. In the opinion, confined to the first question referred, the Advocate General took the view that the national court is required to examine of its own motion whether the credit agreement sets out, in a clear and concise manner, all the information listed in Article 10(2) of Directive 2008/48/EC, and not only the items challenged by the consumer. The opinion, although not binding on the Court, may set the direction for future case law. The CJEU’s judgment will follow at a later date.

Loss of interest and penalties on interest-free loans – a real risk for lenders

The most serious consequence of the free credit sanction is repayment of the credit with no interest and no other costs, in other words, the lender forfeits its remuneration on that agreement. With cases already numbering in the tens of thousands, the portfolio risk can be material. 

Maintaining the contested “tiered interest” structure exposes a lender not only to losing individual cases, but also to a wave of claims and to interim-relief applications that release customers from paying the interest portion of their instalments for the duration of the proceedings.

Regulatory and reputational risk follows. The topic is on the legislator’s agenda (a dedicated SKD act has been signalled) and on the supervisor’s: the Office of the Polish Financial Supervision Authority (UKNF) stresses the need to restore the balance between consumer protection and the availability of financing, and the importance of clear, predictable regulation.

It is worth recalling that the new consumer credit bill prepared by the Office of Competition and Consumer Protection (UOKiK, draft UC82), which would have moved away from automatic application of the sanction and tied it to the gravity of the breach, was halted after the Prime Minister withdrew the UOKiK President’s authorisation for CCD II implementation work. Further work on the bill has been taken over by the Ministry of Finance and the Economy.

How are we supporting lenders following the CJEU ruling in the SKD case?

The “free loan” sanction can significantly impact the profitability of a consumer loan portfolio, product strategy, and the risk of disputes with customers. We assist lenders in identifying their exposure to the “free loan” sanction, reviewing documentation and settlement models, and developing a practical strategy to mitigate legal, regulatory, and financial risks. Contact our team to assess the security of your loan products on the Polish market.