Attorney: The CJEU's position on the assignment of loan agreements closes one of the banks' defense options

The CJEU judgment regarding the assignment of rights under a loan agreement to an entity that is not a consumer closes one of the main avenues of defense for banks in cases relating to the so-called free loan sanctions – says lawyer Karolina Pilawska. According to the Polish Bank Association, the judgment allows domestic courts to examine assignment agreements for unfair provisions.

The Court of Justice of the EU ruled on Thursday, among other things, that EU law does not exclude the possibility for a consumer to transfer rights under a loan agreement to an entity that is not a consumer. This involves, for example, transferring customer claims against banks, e.g. for reimbursement of interest or commission, to specialized compensation companies. The District Court for Warsaw-Śródmieście asked the CJEU for a preliminary ruling.

Paweł Zagaj, director of the retail banking team at the Polish Bank Association, noted in a comment sent to PAP that the judgment allows for examination of the assignment agreement by the courts, although it is not obligatory ex officio.

“Since the correctness of assignment agreements raises doubts, in practice, applications to examine the validity of these agreements are submitted by banks in many proceedings regarding SKD (free loan sanction – PAP),” Zagaj explained.

A free loan sanction is a form of penalty imposed as a result of failures on the part of the bank, e.g. including illegal provisions in the contract. It means that the customer does not have to repay the entire loan amount, but only the borrowed capital. He is also refunded commissions and other fees already paid. Customers can assign related claims against banks – including: for refund of interest or commission – to specialized compensation companies. They usually take part of the amount recovered as payment.

Zagaj added that national courts are increasingly declaring assignment agreements invalid, which – in his opinion – is a signal for consumers to be cautious about offers from compensation companies encouraging the sale of receivables arising from loan agreements.

“The judgment is very important because, according to our internal analyses, approximately half of the cases concerning free loan sanctions are brought not by consumers themselves, but by companies operating on the basis of assignment agreements,” emphasized the representative of the Polish Bank Association. In his opinion, the CJEU's vote answers only some of the doubts related to the problem of purchasing consumer claims.

He emphasized that the Polish Bank Association has for a long time been paying attention to irregularities related to the “instrumental use of both consumer and procedural regulations in the process of purchasing receivables from customers and suing banks by companies building businesses, among others, on SKD claims.” According to Zagaj, the CJEU judgment should be a signal for the legislator to regulate the activities of compensation companies, and for the relevant control authorities to pay special attention to “marketing practices encouraging consumers to sell their receivables.”

However, lawyer Karolina Pilawska, who represents consumers in disputes with banks, said that the CJEU judgment is “double” favorable for consumers, because the CJEU confirmed their right to freely dispose of their claims and showed that a national court “cannot act in a way that deprives the consumer of real protection.”

In her opinion, the CJEU clearly stated that the EU Consumer Credit Directive does not prohibit a consumer from transferring rights arising from this directive to a third party, even if it is an entrepreneur. Pilawska pointed out that the courts are not obliged to ex officio examine the assignment agreement if it is not the subject of the main dispute. “This means that EU law does not prevent the sale of SKD receivables and that the court does not have to automatically examine the content of the assignment agreement if no one submits such a request,” the attorney argues in a comment sent to PAP.

The lawyer stated that the judgment is important because in the last two years the banks' defense in SKD lawsuits was the claim that “such assignments are invalid, contrary to the nature of consumer rights or abusive, so compensation companies cannot sue banks on their own behalf.”

“The CJEU refuted this argument – and in practice it closes off one of the main avenues of defense for banks,” she said. The Tribunal – as the lawyer pointed out – also had to point out that if the assignment is to be examined, the court must assess whether challenging it would not violate the consumer's interest. “In practice, this means that the national court cannot 'rescue' the bank at the expense of the consumer if the consumer has sold his receivable to a professional entity in good faith,” she explained.