The banking sector in the eye of the storm: conclusions from the 12th Banking Law Congress
On one side, a powerful wave of consumer claims; on the other – a technological revolution which could present both great opportunities and threats. On top of that, regulatory uncertainty which makes it difficult to navigate safely. Today, the Polish banking sector resembles a ship on a forbidding sea. What would it take for this sector to change the prevailing conditions and fully unfurl its sails?
We are looking for answers in the discussions taking place at the 12th Banking Law Congress, currently one of the largest forums for discussing the most pressing issues affecting the present and future of the Polish banking market.
When consumer protection becomes assembly-line production
One of the hottest topics at the Congress is the unprecedented number of disputes between banks and consumers.
What began as the legitimate protection of individual rights has, in some areas, evolved into an organised ‘claims industry’ that is now estimated to be worth billions of zlotys.
- The Free Loan Sanction (SKD) – mass lawsuits against banks for even the slightest breach of contract have led to thousands of legal proceedings, paralysing the system
- The decade-long Swiss franc mortgage dispute has become a testing ground, which, according to many experts, has distorted consumer protection standards
- Another hot topic is the questioning of the WIBOR benchmark, which could once again destabilise the credit market
These problems are further exacerbated by the unpredictability of court rulings. Questions referred to the Court of Justice of the European Union create the impression that the law is being rewritten, thereby undermining fundamental trust in contracts and the stability of the legal system.
The problem escalates when individual legal assistance becomes an automated business model focused on generating claims on a large scale. This creates systemic uncertainty and forces the sector to extinguish legal fires instead of focusing on innovation. State intervention and a return to proportion are needed, says Tomasz Leśko, attorney at law and co-head of the Financial Institutions Disputes Practice, who was one of the panellists discussing the development of business models based on consumer rights protection, requests for preliminary rulings and CJEU case law, the role of information and the limits of bank customer protection.
The digital fortress under attack: technology as an opportunity and a threat
Polish banks are global leaders in innovation – just consider BLIK, for example, which has transformed the online payment system. In order to protect customer data and money effectively, financial institutions are now building veritable ‘digital fortresses’, but these are under constant attack.
Fraudsters use social engineering, malware and artificial intelligence to manipulate customers and bypass security measures.
Banks want to fight this and can do so, but they face legal barriers:
- No consent to behavioural analysis: Automatic analysis of unusual customer behaviour, such as logging in from an unusual location or displaying unusual mouse movements, could prevent many cases of fraud. However, only one in four customers agrees to it
- Lack of responsibility of telecoms companies: Telecommunications companies are not included in the system of responsibility for spoofing (impersonating a bank), which makes it easier for criminals to operate
- Vague legislation: Concepts such as ‘authorisation’ and ‘gross negligence’ on the part of the customer are interpreted differently by banks and regulators, leading to disputes over the return of stolen funds
The law should not create the illusion of security while tying the hands of those who have the tools to fight cybercrime. In order to effectively protect customers and their money, it must therefore keep pace with technology. There is no alternative.
The solutions that promote stability in the sector
The scale and complexity of the challenges facing the banking sector are impressive, to say the least. However, the participants of the congress focused on the practical aspects of what needs to be done and on specific, realistic solutions that could restore balance to the entire ecosystem.
According to them, the most important areas for action include:
- A uniform template for mortgage loan agreements. Could standardising agreements act as a ‘vaccine’ against legal disputes? This idea is gaining support, with the discussion focusing on whether this should be a form of industry self-regulation or a statutory solution. Such a template would not only simplify matters for customers, but also solve the problem of so-called modification clauses, which are crucial in long-term agreements
- Engaging in dialogue with regulators. Close cooperation between the banking sector and the Office of Competition and Consumer Protection (UOKiK), the Financial Ombudsman and the Ministry of Justice is crucial. The best way to build a predictable and fair legal environment is through the joint development of standards and good practices
- Making accessibility standard practice. A modern bank is one that is accessible to all, including seniors and people with disabilities. The upcoming European Accessibility Act creates an obligation and an opportunity to develop financial services that are truly inclusive
Dialogue is crucial for us. That is why I believe that initiatives such as a uniform contract template and the formation of working groups at the Office of Competition and Consumer Protection are a step in the right direction. As lawyers, our role is not only to respond to crises, but also to skilfully build a reliable and consistent legal framework for the future, says Tomasz Leśko.
The 12th Banking Law Congress demonstrates that the industry recognises the threats. The time has now come for bold and coordinated action to enable Polish banking to safely navigate into calmer waters.
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Tomasz Leśko
