Poland: BRE Bank notification clause declared unlawful

A clause requiring borrowers to inform BRE Bank about all circumstances that could potentially impair their financial situation has been declared unlawful by the Court of Competition and Consumer Protection.

The court noted that borrowers were required under existing laws to provide the bank with this information, but their obligation concerned only documents necessary for an assessment of their financial situation.

The court ruled that the clause almost always entitled the bank to declare a breach of contract as the circumstances it envisaged could be interpreted broadly. It will be therefore entered in the Register of Prohibited Clauses.

The clause was one of two BRE Bank clauses challenged by the Office of Competition and Consumer Protection.

The other clause, which was declared lawful, allowed the bank’s management board to change the interest rate of renewable loans. The court decided that the bank did not have complete discretion as the parameters allowing rate changes were commonly known and easily accessible by borrowers.

Although the decision is not a binding precedent, it may influence the ruling in another complaint made to the OCCP which is attracting much attention in Polish media. An organisation comprising clients of the bank are conducting a public campaign to renegotiate their mortgage contracts on the grounds that the bank unlawfully changed their interest rates.