Loan institutions in Poland 2023 – upcoming changes

On the 6th of October, the Sejm (lower house of Polish parliament) adopted the so-called anti-usury Act. The Act is now in the Senate, which may submit its own amendments. The Act intends to introduce changes in the functioning of the loans market. It concerns the loans granted by banks and other loan institutions in Poland. The latter refers also to the so-called loan companies. These are the entities that are not banks but grant consumer loans. What exactly is going to change? You will know the answer from this article.

Table of Contents

• The anti-usury Act – the purpose of regulation
• New requirements for loan companies in Poland
• Anti-usury Act – the KNF’s supervision over loan institutions in Poland
• When will the changes in the Polish loan institutions be implemented?
• Summary of changes introduced by the Polish anti-usury act

The anti-usury Act – the purpose of regulation

Why such a name? Together with changes in loan companies, the Act lowers the maximum limits on non-interest costs of consumer loans. The Act also introduces mechanisms to prevent the ‘rollover’ of loans. Thus, with the new Act, the legislator intends to protect consumers from unfair practices of loan institutions.

New requirements for loan companies in Poland

In this text, we focus on potential changes for loan companies if the new provisions enter into force.

The legal form of loan companies and their minimal share capital

Currently, you can operate as a loan institution in Poland only in the form of an LLC or joint stock company. The minimum share capital of such a company amounts to 200.000 PLN.

If the new regulations come into force, the minimum share capital will increase to the amount of 1.000.000 PLN. If the current loan institutions have lower capital, they will have to increase it to adapt.

But, it will still be possible to conduct this activity in the form of a limited liability company. Originally, the draft only allowed for the form of a joint stock company. This would mean a need for transformation for many of the current loan institutions.

If the loan institution will act in the form of an LLC, it will be necessary to appoint a supervisory board. Limited liability companies, as a rule, don’t need to have supervisory boards. In joint-stock companies, it is always obligatory.

So, if the loan institution is now an LLC without a supervisory board, it will be vital to change its structure. 

The origin of funds for running a business

Current regulations do not provide restrictions on the source of funds for loans. The only current limitation is that the funds to cover the share capital cannot come from a credit, loan, bond issue or undocumented sources.

Nonetheless, the new regulations will introduce further restrictions and prohibitions. The new Act assumes that the funds for granting consumer loans cannot come from collecting funds from other persons. Neither natural nor legal ones. It includes the funds from bond issues, other debt instruments and undocumented sources. Yet, it will be acceptable for these funds to come from a bank loan or loans from related entities. But, only if the related entity does not collect its funds in the manner described above.

Anti-usury Act – the KNF’s supervision over loan institutions in Poland

At present, to act as a loan institution you must obtain an entry in the register kept by the Polish Financial Supervision Authority (KNF). Yet, the KNF doesn’t supervise loan institutions. It also doesn’t control the legality of their business activities. So you cannot report to the KNF that a given loan institution shows some incorrect behaviors. Of course, you can address possible notifications or complaints to other state authorities. For example, to the Office for Competition and Consumer Protection.

The anti-usury Act is going to change it. After the implementation of new provisions, the KNF will supervise loan institutions. It will be authorized to inspect the loan companies for their compliance with the law. The KNF will be also allowed to demand from a loan institution information or documents. Moreover, it will be able to issue binding recommendations for them.

It will be allowed to impose administrative fines for non-compliance with its regulations. The KNF may address the penalties to the company itself and to a member of the management board. The penalty for detected irregularities may amount to 15 million PLN for a loan company. In the case of a member of a management board – up to 150 thousand.

Reporting obligation to the KNF

The supervision over loan institutions will be connected with a duty to submit reports to the KNF. As for now, there is no such obligation.

Under new regulations, each loan institution will have to submit quarterly and annual reports on its activities to the KNF. The reports will be submitted only in electronic form.

The report will have to inform about the income earned from granting a consumer loan. It should distinguish the income obtained in connection with non-interest loan costs. Failure to include this information (or failure to submit the report at all) will result in a fine. It will amount to 5,000 EUR.

Fees to be paid to the Polish Financial Supervision Authority

As mentioned above, to run a business as a loan institution you need an entry in the register kept by the KNF. To obtain such entry, you must pay a registration fee that amounts to 600 PLN. There is no obligation to pay periodic fees to the Polish KNF for having an entry in the register.

The amendment to the act, however, charges loan institutions with additional costs. Each loan institution will have to pay to the Polish KNF an annual fee. The payment is going to cover the costs of supervision. The fee will not exceed 0.5% of the sum of revenues obtained from granting consumer loans, but it won’t be lower than the equivalent of 5,000 EUR. Obviously, the percentage rate refers to the previous financial year

Transitional rules

What about loan companies that currently operate in the Polish market? The act provides for a transitional period. Loan institutions entered in the KNF register and not fulfilling the requirements of the share capital, the supervisory board or the source of funds, will be able to continue their activities until December 31, 2023.  By the 30th of November 2023, they will have to inform the KNF about the actions taken to meet the requirements. If the requirements are not met by the 1st of January 2024, the company will be removed from the register.

When will the changes in the Polish loan institutions be implemented?

The law will enter into force within 6 months of its promulgation. Yet, a separate effective date is reserved for certain changes, i.e.

• Provisions on reduced non-interest credit costs, additional content of credit agreements, and requirements for loan institutions for entities not yet listed in the KNF’s register, come into force 30 days after the act’s publication.
• the provisions on the KNF’s control over the loan institutions (including reports and annual fees) enter into force on January 1, 2024

At the moment it is difficult to predict when the act will be announced. Possibly, the Senate will introduce the amendments, which will extend the legislative process. Still, current loan companies should start to adapt to the new conditions as soon as possible.

Summary of changes introduced by the Polish anti-usury act

Below, we present a  comparison of the current legal status with the new one, resulting from the Act. The table refers to new rules of running a loan company:

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