Legal News 3 – January 2019
Below we present Legal News which contains the most important changes in the law that are worth knowing.
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LEGISLATION CHANGES:
Prohibition of compound interest for credit institutions
The prohibition of compound interest, i.e. of charging interest on overdue interest, is regulated in Art. 482 of the Polish Civil Code. Heretofore, Art. 482 of the PCC introduced in § 2 an exception to the principle of prohibition of compound interest, granting the right to charge interest on overdue interest to credit institutions.
The act of 6th December 2018 on amending the Polish Civil Code, signed by the President on 8th January 2019, repealed § 2 of Art. 482 PCC. Thus, credit institutions are prohibited from compound interest in the form defined in Art. 482 § 1 CC, i.e. allowing them to demand interest for delay only from the moment of instituting an action for interest, and earlier – only when the parties agreed to add the outstanding interest to the debt amount after the arrears arose. As explained in the justification of the draft of amending act, the purpose of the adopted act is to eliminate unjustified privileges of credit institutions, as a stronger party of the civil law relationship, and to strengthen the situation of debtors towards credit institutions. The regulation contained in Art. 482 § 2 PCC resulted in an increase in debt of credit institutions’ customers. Pursuant to the act, the current regulations apply to interest due before the entry into force of this act. This change comes into force after 30 days from the day of announcement.
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