The Office for Competition and Consumer Protection (OCCP) has challenged certain clauses used by 19 banks in their mortgage documents.

The OCCP conducted an audit of the banks' mortgage documentation to identify irregularities and eliminate terms which were unfavourable for consumers. It inspected more than 300 standard form agreements, rules and regulation, tables of fees and charges and loan insurance agreements.

Following the audit, the OCCP challenged over 40 contractual clauses, including those which:

  • indicated only the minimum level of fees which could be charged for maintaining a loan

  • reserved an unlimited right to examine the building at the lender's cost

  • made the mortgage loan contract conditional on opening a bank account at the borrowing bank

Some of the banks have already decided to stop using the clauses challenged by the OCCP but the remainder face actions brought by the OCCP for infringing collective consumer interests. The final decision on whether a specific clause is illegal and should be forbidden will be issued by the Court for Competition and Consumer Protection.

The OCCP also announced separate audits of commissions and fees for banking services, levels of loan rate change indicators, as well as the split between purchase and sale currency exchange rates applied for settlements of mortgage payments.

For more information, read the OCCP's press release in English or the full report in Polish.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

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The original publication date for this article was 21/05/2008.