A new Act on mortgage credit and supervision of credit intermediaries and agents

On 22 July 2017, an Act of 23 March 2017 on mortgage and the supervision of credit intermediaries and agents entered into force (Journal of Laws 2017, item 819). The Act transposes into Polish law the Directive 2014/17/EU of the European Parliament and of the Council of 4 February 2014 on credit agreements for consumers to residential immovable property.

The aim of both the directive and the Act is to provide a high level of consumer protection who conclude immovable property credit agreements. The new Act includes not only detailed regulations on the rules and procedures of concluding mortgage credit agreements, the right of withdrawal or early repayment of the credit but also the provisions relating to lender’s obligation to provide information and to the supervision of mortgage intermediaries and agents. Comprehensive regulation is supposed to ensure the stability of the mortgage market and strengthen the consumer’s position towards lenders.

According to the Art. 3 of the new Act a mortgage credit is primarily an agreement whereby the lender grants the consumer a credit secured by a mortgage or other law relating to residential immovable property. The mortgage credit within the meaning of the Act may be granted only in currency or be indexed to the currency in which the consumer receives his income and holds most of his funds.

The Act introduces a number of institutions strengthening the position of the consumer as a party to a mortgage credit agreement.

Prior to the conclusion of the mortgage credit agreement the lender, the mortgage credit intermediary and agent are required to provide the consumer with individual information form on durable medium that includes the data necessary to compare mortgage credits available on the market. The information contained in the form is binding for the lender for at least 14 days.

The provisions of the Act allow for debt restructuring if the consumer delays repayment of the mortgage credit. If the consumer’s request for debt restructuring is rejected, the lender is obliged to allow the consumer to sell the property within the period of not less than 6 months.

The new regulations give the consumer the right to repay all or part of the mortgage credit at any time before the date specified in the agreement. What is more, according to the Act the consumer has the right to withdraw from the mortgage credit agreement within 14 days of the day of conclusion of the agreement without giving a reason.

In addition, the Act regulates the issue of mortgage credit advertising. These advertisements should be unequivocal, fair, understandable, visible and must not mislead the consumer.

The provisions of the Act introduce the institutions of the registry of the credit intermediaries, which is kept by the Financial Supervision Authority and also set out the scope of supervision of that Authority on the economic activity of mortgage credit intermediaries and agents.

The provisions of the Act on mortgage credit and supervision of credit intermediaries and agents apply to agreements concluded after 22 July 2017.

The text of the Act published in the Journal of Laws is available here.