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Polish Bank Association

General remarks

1. The preparation manner of the Draft Guidelines gives the impression that they are supposed to have general character, and their implementation will be taking place in Member States based on more detailed orders issued in this context by local Supervisory Authorities. Conclusions presented in the fifth part of the document of the questionnaire form seem also to confirm such an approach on standards proposed in the Guidelines, which are already in force in MS.

There is a risk, that the final version of this document can be abused as the base for the raising accusations or litigation against banks. So it is extremely essential, in order to clearly point out, that interpretation of imposed duties to borrowers is being made on the national level, and for supervised entities the standards determined by local FSA are binding. Otherwise the Guidelines will be provoking straight out to disputes between customers and banks, and will not facilitate relationships.

2. There is a lack of symmetry between obligations imposed on banks and customers in the process of creditworthiness assumptions. One should not create the false impression that consumers are bearing no responsibility for information given in the process of the creditworthiness assumption.

The initiators of the Draft omitted one of the crucial issues in creditworthiness assumption, i.e. the need of responsible borrowing and consumers obligation to provide full and real financial position and predictions in this respect. So - addressing that issue in the Guidelines in an appropriate way should allow proper interpretation of the specific provisions.

3. European legislators and financial sectors are working at present very intensively on implementation of Directive on credit agreements for consumers relating to residential immovable property. For this reason it is not necessary to widen the technical scope in the Guidelines beyond the fine determined in the Directive or also to introduce interpretation doubts of the provisions, as some guidelines could be understood this way, e.g. 1.1 (in the relation to the Art. 18.6 of the Directive), 1.2 (Art. 20), 3.1 (in the relation to provisions of ESIS) or 4.1. (Art. 20).

Specific comments

1.1
Not opposing general message of this Guideline, one should point out that interpretative problems can appear in case of the duty of the historical research of the level of remuneration of the consumer. It is hard to find grounds for asking the customer questions for the annual aggregate remuneration e.g. 10 years back, even to require from the consumer of authenticating such reply to that questions. Such principle could be limited to persons which are lacking the regular income or employment contracts.

3.1
In order to avoid additional disputes between lenders and consumers one should more precisely define “loan documentation”. In addition one should remember, that e.g. in many EU countries, including Poland, such issues like the standard of the ESIS or contents of the mortgage credit agreement are already regulated by the Parliament Acts. So, any possible additional requirements in these documents must include applicable regulations already at present.

4.2
It is one of the Guidelines which can become a cause of conflicts among banks and customers, who can concern a new periodic examination of their creditworthiness as an unnecessary additional burdening with bureaucratic duties. Probably customers fulfilling their obligations on time will have such an approach. In order to avoid that kind of misunderstandings or even collective lawsuits folded against banks, the practical accomplishment of this Guideline should depend on developing appropriate uniformed standards on individual markets.

4.4
Not opposing the technical correctness of this Guideline, it is not possible however not to take into account the peculiar stage of the restructuring of European pension schemes, we are now. In many countries debate continues about the term of the retirement age and it is difficult at the moment to settle, what final arrangements will be in this matter. Next, e.g. in Poland or in Germany, implemented in final years solutions are being cancelled or in the far-reaching way the legislator is changing their conditions. These factors cause, that the practical accomplishment of this guideline can be burdened with the big mistake or generally speaking not be possible without exposing the bank to charges of lack of a sound due diligence.

6.1
In this guideline the need to carry specific stress-tests for mortgage portfolio (or of individual borrowers) are indicated. One should however underline that assumptions or boundary conditions for such calculations should be determined by banks or by the Supervisory Authority independently.

Conducting such calculations should not be limited exclusively to normal mathematical calculations, but it can (should) also impact actions taken by banks towards borrowers, as the safety of deposits and the stability of the banking industry should be superior values.

Experience has shown, most consumers do not share the view of the bank-lender on the potential risks for the timely fulfillment of credit obligations and these precautionary measures are treated as a breach of contract or of their basic rights. Thus, in the final version of the Guidelines there should be an indication of the potential effects triggered by the implementation of the obligations may arise for borrowers - even if that part would be an educational element for the customers.

7.1
The proposed rule requires clarification, in particular in the context of its expected impact on the creditworthiness assumption. This remark refers to the term used by the authors of the concept as groups of loans with higher risk profile" - does this mean for example FX loans or perhaps loans with variable interest rate? For both of these groups separate rules were introduced in EU Directive on consumer credit agreements relating to residential property, so the touching once again such issue in the Guidelines seems excessive."
No additional requirements are considered necessary.
Polish Bank Association