Polish Regulator Fines Four Banks Nearly $38 Million Over Unfair Contract Terms

Key Takeaways

• Four Banks Penalized: Poland's UOKiK imposed fines totaling approximately $37.7 million (PLN 147.09 million) on Erste Bank Polska, ING Bank Śląski, Bank Pocztowy and Plus Bank over unfair contractual provisions.
• Excessive Fee Increases: ING Bank Śląski used provisions allowing fees and commissions to rise by as much as 200% following relatively small increases in inflation or average wages.
• Unclear Contractual Powers: UOKiK challenged clauses permitting banks to change agreements based on broadly defined regulatory developments, operating costs and improvements to existing services.
• Consumer Protections: The regulator maintained that customers must be able to understand when contractual terms may change, which provisions may be affected and how extensive those changes may be.
• Decisions Subject to Appeal: Each bank received two penalties, covering contractual amendments and changes to fees and commissions. All four institutions may appeal to the Court of Competition and Consumer Protection.

Deep Dive

A bank could raise its fees by as much as 200% after a slight increase in inflation. Another could introduce charges for services that had previously been free. A third reserved the right to alter credit card agreements when it improved its products or expanded its offerings. These were among the contractual provisions challenged by Poland’s Office of Competition and Consumer Protection (UOKiK), which announced penalties totaling approximately $37.7 million (PLN 147.09 million) against four banks on October 15.

The decisions concern Bank Pocztowy, Erste Bank Polska, ING Bank Śląski and Plus Bank. According to the regulator, all four institutions used unfair contractual terms that gave them excessive discretion to change existing agreements, increase fees and commissions, or introduce new charges.

The provisions appeared across a range of financial products, including bank accounts, payment and credit cards, consumer loans and mortgages. Erste Bank Polska received the largest penalty, approximately $20.7 million (PLN 80.68 million), followed by ING Bank Śląski at $16.2 million (PLN 63.25 million). Bank Pocztowy was fined approximately $695,000 (PLN 2.71 million), while Plus Bank received a penalty of approximately $116,000 (PLN 453,000).

Each bank received two fines, one for provisions governing changes to contractual terms and another for those concerning fees and commissions. The decisions are not final, and the banks may appeal to Poland’s Court of Competition and Consumer Protection.

UOKiK President Tomasz Chróstny said consumers must be able to understand the terms to which they are committing themselves, including the circumstances in which those terms might subsequently change.

A consumer choosing a bank account or taking out a mortgage does so on the basis of particular costs, services and repayment obligations. The regulator maintains that a bank cannot reserve an unrestricted right to revise those arrangements after the agreement has been signed.

When Inflation Becomes Grounds for a Fee Increase

At ING Bank Śląski, one challenged provision allowed fees and commissions to increase by as much as 200% following a 0.30 percentage point rise in inflation or a 1% increase in average wages. UOKiK found that such modest movements in economic indicators did not sufficiently justify increases of that magnitude. The mechanism could also allow the bank to raise charges almost every month. Other provisions gave ING considerable discretion to amend loan terms in response to documents issued by supervisory authorities or other authorized entities.

The language was broad. A decision, recommendation, instruction, position, ruling or other document could potentially serve as grounds for changing an agreement. UOKiK questioned terms such as "position," "other document" and "another authorized entity," which left consumers unable to determine precisely what might trigger an amendment.

The wording could even encompass positions issued by industry organizations, including the Polish Bank Association, according to the regulator. Erste Bank Polska's provisions presented similar concerns, although the mechanisms differed.

Under one clause, the bank could increase fees or commissions if average monthly wages rose by at least 3% or an inflation-related threshold of 0.5 percentage points was met. The agreement also allowed the introduction of charges where none had previously existed. A service that had been free could become subject to a fee of up to approximately $51 (PLN 200), while a percentage-based charge previously set at zero could rise to 2%.

UOKiK questioned both the thresholds and the manner in which they operated. The inflation provision failed to establish clearly whether the relevant condition was an increase in the inflation rate or simply the level of inflation itself. A movement of 0.5 percentage points could arise from relatively ordinary fluctuations. Meanwhile, the 3% wage-growth threshold had been reached consistently in recent years.

The bank's contractual language also permitted an "appropriate" increase in fees or the introduction of new charges in response to higher operating and service costs.

What constituted an appropriate increase was not adequately explained. Nor did the provisions establish a sufficiently clear relationship between changes in economic indicators and the amount a customer might ultimately pay.

The regulator found that identifying a measurable economic indicator was insufficient on its own. Customers also needed to understand why a change in that indicator would affect a particular fee and how the resulting increase would be calculated.

The Cost of Doing Business

Plus Bank's challenged provisions concerned increases in operating expenses. One clause allowed the bank to change fees and commissions when the prices of energy, telecommunications, postal services, transaction settlements or interbank settlements rose by at least 1%. It also referred to other costs paid to external institutions.

That final category drew particular scrutiny. By referring broadly to other external costs, the bank had reserved the ability to rely on expenses that customers could not identify when signing their agreements. The provision offered little certainty about which costs might eventually be passed on to them.

UOKiK also questioned the assumption that higher operating expenses automatically justified increasing customer charges.

Banks incur costs in providing their services, and those costs fluctuate. Some are ordinary commercial risks that institutions must consider when setting prices and establishing contractual terms. The regulator found that the provision failed to give consumers adequate certainty about the circumstances in which those expenses could justify changes to their agreements.

At Bank Pocztowy, the disputed language concerned improvements to services rather than increases in operating costs. Its credit card agreements and associated terms allowed amendments when the bank expanded its range of products or services or improved existing offerings.

The provision did not adequately limit the changes that could follow. According to UOKiK, it failed to distinguish amendments affecting ancillary features from those concerning terms material to a customer's original decision to enter the agreement.

Its potential reach extended to matters as consequential as the method of repaying loan installments or the form of security required for a loan. The regulator considered the wording too broad because customers could not establish which contractual obligations might be affected by changes ostensibly intended to improve the bank's services.

Why the Right to Terminate Is Not Enough

The ability to reject amended terms and terminate an agreement might appear to provide customers with a safeguard. UOKiK rejected that reasoning, particularly where outstanding debt is involved. For someone with a mortgage or another substantial loan, terminating an agreement may mean having to repay the outstanding balance immediately and in full. Finding replacement financing under those circumstances can be difficult, especially when the borrower has little time to arrange it.

A customer may consequently face a choice between accepting unfavorable contractual changes and taking out another loan on potentially worse terms. The regulator maintained that the right to terminate an agreement does not remedy an unfair provision allowing the bank to amend it in the first place. UOKiK also cited judgments of the Court of Justice of the European Union, including Invitel (C-472/10) and Kásler (C-26/13), in support of its position on transparency in consumer contracts.

The authority has maintained for years that clauses permitting unilateral contractual amendments must identify the circumstances justifying a change and explain how that change will be determined. Consumers must be able to assess the potential consequences before entering an agreement.

The latest decisions concern contractual provisions used across a substantial range of banking products, from everyday payment accounts to long-term borrowing arrangements. UOKiK's objections focus on the powers those provisions reserved for the banks and the uncertainty they created for customers.

For the four institutions, the penalties remain subject to appeal. The regulator has nevertheless set out its findings in considerable detail, identifying clauses that it considers too broadly worded, insufficiently transparent or lacking adequate limits on the changes a bank may impose. The decisions leave the banks facing approximately $37.7 million (PLN 147.09 million) in combined penalties, with the final outcome dependent on whether the institutions challenge the rulings and the results of any appeals.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey