Poland's competition watchdog fines four banks PLN 147m; Erste and ING pay the most

Poland's Office of Competition and Consumer Protection (UOKiK) fined four banks on Monday, for a total of PLN 147.09 million. Erste Bank Polska faces the largest fine, PLN 80.68 million. ING Bank Śląski was fined PLN 63.25 million, Bank Pocztowy PLN 2.71 million and Plus Bank PLN 453,000. Erste and ING together therefore account for almost PLN 144 million, or nearly 98% of the total. The case concerns contract terms that allowed the banks to change conditions and raise fees unilaterally.

Two fines for each bank

Each bank was fined twice. The first fine concerns modification clauses, meaning terms that allow a bank to change a contract while it is in force. The second concerns clauses on fees and commissions. The disputed terms appeared in contracts for accounts, cards, loans and mortgages, products that many customers use every day.

Fees up by as much as 200%

The most far-reaching example involves ING Bank Śląski. According to UOKiK, a clause in the bank's contracts allowed fees to rise by up to 200% after an increase of just 0.3 percentage points in inflation or of 1% in average wages. A small change in an economic indicator could therefore justify tripling a fee. At Plus Bank, a fee rise could be based on an increase of at least 1% in "other costs", with an open-ended list of such costs. Customers were thus unable to predict when, and for what reason, they would pay more.

"A blank cheque"

A bank may reserve the right to change fees in a contract, but according to the watchdog this cannot mean complete freedom. "A modification clause cannot be a blank cheque," stresses UOKiK president Tomasz Chróstny. In Polish he refers to a blank promissory note, a document signed without an amount, which the creditor fills in later. He compares it to terms that give a bank a free hand in setting new fees. "Inflation alone or a general rise in costs does not give a bank free rein to raise fees," he adds.

What customers can do

The decisions are not final. The banks can appeal against them to the Court of Competition and Consumer Protection (SOKiK). Customers who believe they have been overcharged can file a complaint with their bank and, if that does not help, turn to the Financial Ombudsman or UOKiK. Borrowers should be careful, though: terminating a loan agreement may mean having to repay the whole balance in one go. A hasty termination may therefore cost more than the disputed fee.

What is still unknown

The banks have not yet commented publicly on the decisions. It is also unclear whether customers will get back money from fee rises already charged under the disputed clauses. A fine imposed by the watchdog does not automatically mean a refund for customers, so it is worth keeping statements and correspondence with the bank about fee changes. If the banks appeal, a court will settle the final shape of the decisions.