Poland Fines AS Inbank $1.2 Million Over Consumer Credit Practices

Key Takeaways

• Nearly $1.2 Million in Fines: Poland's UOKiK fined AS Inbank approximately $1.2 million (PLN 4.692 million) over three practices involving linked consumer credit agreements.
• Loans Improperly Classified: The bank treated loans financing solar panels, heat pumps and other purchases as independent credit agreements despite meeting the statutory conditions for linked credit.
• Repayment Demands Challenged: AS Inbank demanded repayment from consumers who withdrew from linked credit agreements, although the funds had been paid directly to sellers responsible for returning them.
• Consumer Rights Not Disclosed: The bank failed to inform borrowers of their right, under certain conditions, to pursue the lender when sellers failed to fulfill their contractual obligations.

Deep Dive

The Office of Competition and Consumer Protection (UOKiK) has imposed approximately $1.2 million (PLN 4.692 million) in fines on AS Inbank over three practices involving loans that were legally connected to the purchases they financed. The authority found that AS Inbank had treated the agreements as independent consumer loans, denying borrowers information about protections available under Polish law. The decision is not final and can be appealed.

The case concerns financing offered through businesses selling photovoltaic installations, heat pumps and other products. Rather than arranging credit independently, customers could obtain loans through sellers working with AS Inbank. Those sellers presented the bank's financing offers, prepared applications and assisted with the steps necessary to secure the loans. UOKiK determined that this cooperation, together with the purpose of the financing, satisfied the statutory conditions for linked credit agreements.

Such agreements carry protections that ordinary consumer loans do not necessarily provide. If a customer validly withdraws from a sales or service contract financed through linked credit, the withdrawal also takes effect against the associated loan. And when a consumer withdraws from the linked credit agreement itself, the law establishes specific rules governing repayment.

Where the bank has transferred the proceeds directly to the seller, the seller must return the loan principal to the bank. AS Inbank instead demanded repayment from borrowers, according to the authority.

Tomasz Chróstny, president of UOKiK, said the protections exist because the purchase and its financing are not treated as independent transactions under the law. The authority also found that AS Inbank failed to inform consumers of their rights when sellers did not fulfill their contractual obligations.

Article 59 of Poland's Consumer Credit Act allows borrowers to pursue the lender when a seller fails to perform a contract or performs it improperly, provided an earlier demand for performance against the seller has been unsuccessful. The lender's responsibility is limited to the amount of credit granted. AS Inbank did not include information about that right in its agreements, UOKiK said.

The Bank's Treatment of Linked Credit

AS Inbank maintained in its consumer information forms that the loans were not linked to the underlying purchases. It took the same position when responding to customer complaints, arguing that the bank and the sellers were independent businesses and that the financing and sales contracts were separate agreements.

UOKiK rejected that reasoning. The authority examined the arrangements between AS Inbank and the businesses offering its loans, including the sellers' involvement in preparing applications and concluding credit agreements. It found that the transactions met the legal definition of linked credit, regardless of the bank's description.

Not every loan used to finance a particular purchase qualifies as linked credit. The classification depends on statutory conditions concerning the relationship between the financing and the goods or services being purchased. In this case, UOKiK found that the bank's cooperation with sellers established the necessary connection.

The bank also relied on a contractual provision requiring borrowers to repay the funds after withdrawing from their credit agreements. UOKiK found that the provision could not override the statutory repayment rules applicable to linked credit. Those rules are mandatory. A bank cannot change them through its contractual terms.

Chróstny said the nature of an agreement is determined by the law and the way the transaction operates in practice, rather than the classification chosen by the lender. The authority found that AS Inbank's statements had misled consumers about the nature of their loans and the rights available to them.

The distinction was particularly important when customers sought to withdraw from agreements or pursue remedies for purchases that had not been fulfilled. Under the linked credit provisions, borrowers may have claims against the lender as well as the seller, subject to the conditions established by law.

Penalties and Appeal

UOKiK imposed three fines totaling approximately $1.2 million (PLN 4.692 million). The money will go to Poland's Financial Education Fund. AS Inbank has one month from the date it receives the decision to appeal to the Court of Competition and Consumer Protection. The authority's findings and penalties remain subject to judicial review.

UOKiK has advised consumers who obtain financing through sellers to examine how their credit agreements were arranged, particularly where the loan was offered for a specific product or service. The bank's description of the financing does not, by itself, determine whether the agreement is legally linked to the purchase.

The authority also advised consumers uncertain about the nature of their agreements to submit separate withdrawal notices to both the seller and the lender. Although sellers must repay the principal when consumers withdraw from linked credit agreements and the funds were paid directly to the sellers, borrowers may still owe interest to the extent required by law.

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