What is the free-credit sanction?
The free-credit sanction (abbreviated as SKD) is an option, introduced under Article 45 of the Act of 12 May 2011 on consumer credit, for settling a consumer loan solely up to the amount of the capital borrowed. In other words, a person with a loan repays the company from which they borrowed the money exactly the amount obtained in this way, without any additional fees, commissions, interest, etc. This entitlement may be used when the lender has failed to fulfil its statutory obligations. The free-credit sanction is therefore a mechanism protecting consumer interests and is intended to prevent unfair practices in the lending sector.
Who can apply to activate SKD?
The free-credit sanction is not intended for everyone. Above all, it is available only to people with consumer loans. Under the law, a consumer is a natural person carrying out a legal transaction with a business that is not directly related to their business or professional activity. The loan taken out must therefore be classified as a consumer loan. Mortgage loans, for example, are not considered consumer loans (except those granted up to 21 July 2017). The same applies, for instance, to leasing if the agreement does not impose on the consumer an obligation to purchase the leased item.
The second issue is the loan amount—it may not exceed PLN 255,550.
When can I apply to activate SKD?
Above all, when the company granting the loan has actually failed to fulfil its obligations. What does this mean exactly? The law sets out, in fairly general terms, the requirements that banks or loan companies offering customers various forms of financing—which are later classified as consumer loans—must meet. These requirements concern the following matters:
- the lender's fulfilment of its duty to provide information to the consumer before the loan agreement is signed;
- formal matters concerning the elements that a loan agreement should contain;
- material errors that impair the ability to assess the consumer's obligation.
As can be seen, however, these conditions are presented rather generally. In practice, the key point is that the entire process of granting the loan and its subsequent operation should be presented to the consumer clearly, understandably and correctly. A bank, for example, may therefore be considered to have failed to fulfil its obligations if it incorrectly states the lender's or borrower's details in the agreement, presents the interest rate imprecisely, misleadingly presents the terms of the agreement or the procedures for changing some of its provisions, fails to state the actual annual percentage rate, and so on. There are actually many grounds for activating SKD.
The second issue is the deadline. The free-credit sanction may be used for a maximum period of one year from the complete performance of the agreement.
What can be gained through SKD?
As mentioned, SKD effectively makes the loan free. If we have already repaid our obligation but are still within one year of the agreement's performance, this solution may enable us to recover a considerable amount of money. People who are still repaying the loan can use it to secure much more favourable terms for settling their financial obligation.
What should I do to use SKD?
It is best to contact a law firm experienced in this area, which will handle the entire case. The starting point is an analysis of the loan agreement, which must contain certain irregularities that entitle the borrower to use SKD. Many lawyers offering assistance in this area review documents free of charge. Only after fully establishing cooperation with the client are the terms of their remuneration agreed. Nevertheless, it is worth seeking such assistance, because people without legal knowledge and experience may quickly discover that overcoming successive obstacles in the form of court formalities can be genuinely difficult.
Another step is to compile all the necessary documents related to the loan, including the agreement, regulations, annexes, attachments, etc. A lawsuit must then be filed. Its preparation is also best entrusted to an experienced lawyer.