BZ-08
Lack of clarity in the provisions of a dual-currency agreement and the phenomenon of usury
Ultimately, two films should be presented here, but since they do not exist yet, I am including short summaries of them.
First, a short film – the recent past: usury in the classical sense, known from history (early twentieth century).
A man comes to a thug for a loan and agrees to everything because he urgently needs cash for a doctor for his wife, so he does not even listen carefully to what demands the other man is making, because he wants to get out of that dive where the transaction is taking place as quickly as possible (a smoky beer hall located in a dark basement; the noise of drunken revelers makes calm conversation impossible). Everything, however, is obvious from the very beginning and there is no beating around the bush: “if you don’t repay on time, the debt will multiply, and if you don’t repay everything, we’ll break your arms, then your legs, and so on,” says the usurer. At the next table, two thugs are sitting and listening to the conversation; after the last sentence, they exchange a knowing smile.
After a month they come for the debt, but the man does not have the full amount, so one of the thugs says, “you were supposed to repay everything, but give what you have, and next month you will repay twice as much, or the debt will triple”; after these words, he and the companion standing behind him burst out laughing.
The second film – contemporary times: showing the mechanism of granting a dual-currency loan (early twenty-first century).
The moment of choosing a loan in a clean and brightly lit bank – the credit adviser says, “you do not have creditworthiness for a PLN loan, but you do have it for one indexed to CHF. It is also a loan in zlotys, but with a lower interest rate.” Close-up on the table with the loan agreement — the amount in zlotys is visible on it — the borrower signs the agreement. “How much will the first instalment be?” asks the borrower. “You will find that out before repaying the first loan instalment,” replies the adviser. Supposedly everything is obvious — after all, they showed the loan repayment simulation — and full professionalism: a modern office building, clean and fragrant, coffee, tea. The loan amount is much higher than in the previous film, because the borrower does not need money for a doctor, but for an apartment for his family, since he lives with his wife and daughter in a tiny room. This time everything is under state supervision; theoretically, nothing should threaten the borrower. After some time, the loan capital becomes a multiple of the amount paid out by the bank. At the bank they say, “yesterday you indeed owed us 100, but today it is 200 thousand — after all, this is the loan you wanted, and now there is nothing we can do about it.” The borrower replies, “so despite repaying every instalment on time every month, it may turn out that in a moment I will owe you 300?” In response, he gets an ironic smile and a shrug.
And one more short explanation:
The provisions of the dual-currency loan agreement cleverly conceal the lenders’ intention to give themselves, in addition to the legally permitted profit, that is, loan interest, an additional profit, cleverly written into the loan agreement.
Two currencies in the agreement violate Banking Law, because although the second currency is entered as a measure of indexation/valorization/denomination, in reality, that is, when assessing the mathematical effects of these provisions, there are two currencies — in one the loan is granted and disbursed, and in the other the borrower’s debt is defined. It so happens that the currency defining the debt is always stronger than the currency of the loan disbursement. The lender violates consumer credit law because, at the moment of signing the agreement, it does not specify the total amount payable in the currency in which it grants the loan, and the loan interest rate in this situation does not fulfill its informational function, because it does not reflect the full charge for the loan. The loan repayment simulation shown to the borrower before signing the agreement does not show the cost of the currency spread, does not include the cost of purchasing currency options, and is based on the assumption that the exchange rate will remain unchanged for 30 years.