The European Court of Justice (ECJ) issued a ruling on February 12 regarding the WIBOR benchmark. The decision has significant implications for thousands of ongoing disputes. The Court affirmed that national courts are not authorized to verify the benchmark itself, a move that would undermine the supervisory system for key benchmarks established by the EU’s BMR regulation.
However, the ECJ as well indicated that national courts may assess whether a client was properly informed about the risk associated with a variable interest rate.
Banks are required to provide borrowers with information about the name of the index, its administrator and the effects of a WIBOR increase on the loan interest rate and installment amounts.
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Not the Index, But the Information
– The ECJ ruling is an important reference point for courts. There will be no revolution in WIBOR cases. The Court confirmed the existing case law of Polish courts – commented Anna Cudna-Wagner, legal counsel at CMS Cameron McKenna, which, together with Romanowski and Wspólnicy, represents PKO Bank Polski before the ECJ.
The case concerned a PKO BP client who entered into a 20-year mortgage agreement with the bank for over 400,000 zł, indexed to the 6M WIBOR rate. After several years, the borrower sued the bank, claiming that the clause regarding the variable interest rate was unfair and not binding on him as a consumer.
The borrower alleged that the bank did not explain clearly and understandably how the 6M WIBOR was determined, what factors influenced its value, and what role banks played in setting the index. In his opinion, without this information, he was unable to estimate the economic consequences of the agreement, while all the risk of changing interest rates was transferred to him. The Polish court referred questions for a preliminary ruling to the ECJ regarding the interpretation of EU law.
Banks Breathe a Sigh of Relief, But Disputes Won’t Disappear
Banks and law firms representing consumers had been awaiting the ruling for months. In Poland, between 2, and 2.5 million active mortgage loans have been taken out, the majority of which are based on the variable WIBOR rate. There was a risk that the Court would side with the consumer and open the door to widespread challenges to agreements. However, that did not happen.
– The ECJ confirmed that WIBOR is an index compliant with national and EU law, controlled by national and European supervisory authorities. It is therefore legal, and banks informed about its utilize in a detailed and transparent manner – commented Piotr Bodył-Szymala, Head of Legal and Regulatory Affairs at Santander Bank Polska.
As reported in November, 3,149 new cases concerning WIBOR agreements were registered in courts through September of last year – 62% more than in the entire previous year. From the beginning of 2024 to date, a total of 5,090 lawsuits have been filed. The majority of cases are dismissed, and favorable rulings for clients remain marginal.
– This is an important ruling, ending the discussion about alleged manipulations related to WIBOR. The ruling confirms the previous jurisprudence of ordinary courts, which did not locate any defects in the index or violations of information obligations by banks – adds Bodył-Szymala.
Impact on Installments and APR
While banks emphasize the importance of confirming the legality of WIBOR, consumer representatives point to other elements of the ruling.
The Court indicated that, in addition to verifying the transparency of contractual terms under Directive 93/13 (on unfair terms in consumer contracts – ed.), banks should simultaneously fulfill obligations arising from other acts, including the mortgage credit directive – says lawyer Wojciech Bochenek from the law firm Bochenek, Ciesielski i Wspólnicy in an interview with money.pl.
He points to thesis 92 of the ruling, in which the ECJ stated that banks should inform borrowers about the impact of an increase in the reference rate on both the amount of installments and the APR, or Annual Percentage Rate. This indicator shows the total cost of the loan on an annual basis as a percentage of the total amount of the obligation.
According to the lawyer, In other words that banks should present the risks associated with rising interest rates in a graphic way – not only in relation to WIBOR itself, but also to the total cost of the loan.
This information should include a warning that the total cost of the loan indicated as the APR may change – emphasizes Bochenek.
He adds that this may also be relevant in cases concerning consumer loans and claims for the so-called free loan penalty, when the APR in agreements was incorrectly stated or without simulation of rising costs.
The free loan penalty (SKD) results from Art. 45 of the Consumer Credit Act. It allows a borrower to repay a consumer loan – up to the amount of 255,550 zł – without interest, fees and other costs, if the lender violated the law.
The number of cases regarding the so-called free loan is approaching 20,000 – according to a November analysis by bankier.pl, based on data from banks’ financial statements. The data show that the pace of new lawsuits is slowing down, but remains at a double-digit growth rate.
Karolina Wysota, money.pl journalist
