An interview with Paweł Rochowicz from “Rzeczpospolita” daily, published in the “Law every day” section on 24th December 2020
Paweł Rochowicz (PR): The head of the Financial Supervision Authority recommended that franc borrowers settle their disputes with banks amicably. Is such a solution likely to succeed?
Ewelina Stobiecka (ES): It depends on the situation of the individual bank customer. In my practice I have met many people who do not have time for court disputes and they are good bank customers, they don’t want to change the bank and therefore want to settle. Unfortunately, the willingness of banks to make such settlements is still negligible.
PR: They don’t want to settle, even though they are increasingly losing these cases with customers in the courts, especially after the telling CJEU ruling?
ES: Unfortunately, this is how it looks so far. Perhaps, however, in response to the summons by the head of the Financial Supervision Authority (KNF) mentioned by the editor, as well as to these lost court cases and the unfavourable court line shaping up for banks, banks will soon develop a different position. But some may also stall, waiting until the cases in the second instance are resolved. For the time being, time has worked for them, because due to the pandemic, the processing of cases in the courts has lengthened considerably. However, some bank customers also file settlement notices, even before filing a lawsuit. This is not only a way of interrupting the limitation period, but also a kind of act of goodwill demonstrating that the client wants to reach an agreement with the bank. I know of several examples from practice where such notices were filed together with a specific settlement proposal, including a proposal by the client to convert the loan into PLN from the outset, which is exactly what the KNF suggests. However, there was no settlement, even though the client voluntarily wanted to pay a considerable amount on top of what he had already paid and what would have been billed if the loan had been granted on the same terms as a PLN loan. Many other people, for various reasons, would also like to get rid of the loan quickly, not only because of its amount, but also, for example, in order to be able to sell the property. It also happens that credit is jointly repaid by former spouses, who being already divorced do not want to be stuck in this embarrassing arrangement as co-borrowers.
PR: Let us assume that the bank values the client in question and wants a settlement. Would it really be quicker to settle than going to court?
ES: I think it would be quicker. You can file, as I mentioned, a request for a settlement attempt. Then the court sets a special hearing. If a settlement is reached, the court approves it and such settlement has the force of a judgment. The second possibility is to settle out of court, for example before a mediator. Many centres can be used here, including, as it were, the mediation centre at the Polish Financial Supervision Authority. Such a settlement can also be submitted to court for approval. My experience shows that courts approve such settlements very quickly. They usually do it willingly, if only to improve their statistics of settled cases. It is also possible not to involve the court at all and to reach an agreement by way of a simple out-of-court settlement.
PR: Franc borrowers may be concerned, however, that such a settlement will not be sufficiently effective.
ES: Much depends on how it is formulated. For example, it is possible to use the institution of a substantive legal so-called waiver of debt. This is the equivalent of a waiver of claims in court proceedings, when, by concluding a settlement, we waive all claims for the future. Then, the parties may stipulate in such a settlement referring to their loan agreement that the client owes the bank a specific amount, and the parameters of the debt repayment are subject to specific modifications. If such agreements were properly drafted, it would be very difficult to challenge them unless someone could prove extraordinary circumstances relating to defects in declarations of will, such as acting under the influence of threats, which would be a rather daunting task.
PR: Customers who have been let down by banks may not trust various similar clauses…
ES: I can imagine that if a bank takes a more individual approach to a client and, for example, through its settlement agent discusses the terms of such a settlement, it may gain the client’s trust, especially if the client wants to reach such a settlement. Of course, a different impression may be created if the bank acts in a clerical and schematic manner, simply sending out a ‘settlement’ annex to a credit agreement, printed in hundreds of thousands of identical copies for different customers. When a given bank has granted thousands of such loans, then, of course, an individual approach to each client is difficult, but it is possible because, after all, the borrowers themselves also “group” themselves around, for example, a single attorney who represents them in court or in various associations. In addition, banks can and should develop a multi-dimensional settlement decision matrix, grouping clients and their claims according to specific criteria, which will help to make a fairly individualized settlement proposal. One should take into account in such a matrix , among others, the date the loan was granted, which of course is linked to the exchange rate and the volume of flows so far, the term for which it was granted, the problem of spreads and the personal situation of the borrowers. This is also in the interest of the banks, insofar as they want these loans to be repaid as efficiently as possible and to rid their ‘portfolio’ of these difficult debts. In the current special situation of the crisis caused by the pandemic, it can be expected that more than one client may declare consumer bankruptcy, for example. Then, recovering money from them is much more difficult, and selling such debts is not easy either.
PR: However, if one were to choose the court scenario, one would probably need to adopt a great deal of patience
ES: Franc borrowers are indeed waiting a long time for judgments in initiated cases. In addition, even if the court gives a verdict and invalidates the old credit agreement, it does not calculate in detail the repayment of the loan – an agreement between the bank and the client is needed here anyway. It should also be noted that many law firms assisting Franc borrowers count on a bonus from the amount won and they also manage conducting a court case. These are not always honest firms/practitioners, which is also already being dealt with by the UOKiK. However, given the KNF’s clear suggestions, I think banks will be willing to settle. This, in turn, may lead to faster repayment of loans and other beneficial events, e.g. the property securing the client’s loan being released and freely traded. Settlement can also be beneficial for the bank in terms of its market position and reliable asset valuation. Especially in times of pandemics, when many borrowers, including other bank customers, lose their ability to repay their loans, the bank has to apply a higher risk weighting to such distressed loans. If we add the thousands of cases of franc borrowers to this, in the vast majority of which judgments invalidating credit agreements have already been handed down, this obviously threatens to destabilise the banking system. I believe that the whole story of the franc borrowers in Poland needs a ‘reset’, with both sides of the story being looked at from the point of view of profit and loss, taking all the circumstances into account. Looking at it from the perspective of such a profit and loss account, a settlement is often the most sensible solution (for both sides), as the Polish Financial Supervision Authority itself has already admitted.
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