A consumer credit agreement should set out the key financing terms clearly and correctly. The law imposes a number of obligations on banks and other lenders, concerning among other things the cost of credit, interest, the APR, repayment terms and the information provided to the consumer.

If certain obligations are breached, the consumer may in appropriate cases use the free credit sanction.

Its application may lead to a situation where the borrower repays only the capital provided, without the interest and other costs due to the lender that are covered by the sanction.

Our firm helps consumers analyse credit and loan agreements, establish whether there are grounds for applying the free credit sanction and pursue related claims against banks and other financial institutions.

What is the free credit sanction?

The free credit sanction is provided for in the Polish Consumer Credit Act.

If the lender has breached the obligations set out in the Act, the consumer may – once the required conditions are met – submit a statement exercising the sanction.

The result may be the lender losing the right to interest and other credit costs due under the agreement.

The consumer still repays the capital received. The sanction therefore does not mean that the loan itself is cancelled, but that the lender loses a certain remuneration for granting it.

If some of the interest or costs have already been paid, there may be a claim for their return.

How we can help

In cases concerning the free credit sanction, our work includes, among other things:

• analysing consumer credit and loan agreements,

• checking that the required information is correct,

• analysing the APR and the total cost of credit,

• assessing how the interest rate was defined,

• analysing commissions, fees and insurance,

• checking the rules on early repayment and withdrawal from the agreement,

• assessing whether the free credit sanction can be applied,

• preparing the appropriate statement and complaint,

• determining the amount of potential claims,

• representation in disputes with a bank or lending institution,

• claiming the return of costs and interest covered by the sanction.

Every agreement requires a separate analysis. The mere presence of an error or inaccuracy in a document does not automatically entitle you to free credit.

Which agreements may be subject to the sanction?

First, it must be established whether the specific agreement is subject to the Consumer Credit Act.

This may concern, among others, certain:

• cash loans,

• consumer loans,

• instalment loans,

• revolving loans,

• other forms of financing covered by the Act.

However, not every loan granted to an individual will be subject to the sanction.

What matters, among other things, is the type of agreement, the purpose of the financing, the time it was concluded and the borrower’s status as a consumer.

That is why, before analysing errors in the agreement itself, we first establish whether the free credit sanction rules can apply to the specific obligation at all.

What irregularities do we look for in the agreement?

The law sets out specific obligations of the lender, a breach of which may be relevant for applying the sanction.

We analyse, among other things, how the following were presented:

• the total amount of credit,

• the interest rate and the rules for changing it,

• the annual percentage rate of charge – APR,

• the total amount payable,

• commissions and other costs,

• the rules for changing fees,

• the schedule and method of repayment,

• the right to early repayment,

• the right to withdraw from the agreement,

• other information required by the Act.

What matters is not only whether certain information appears in the agreement, but also whether it was presented in a way that allowed the consumer to genuinely assess the amount and terms of their obligation.

Does every error mean free credit?

The free credit sanction is a special consumer protection instrument, but it should not be treated as an automatic consequence of every typo or insignificant inaccuracy.

The Court of Justice of the EU has confirmed that a sanction consisting of the lender losing the right to interest and fees may be compatible with EU law also in the case of various types of breaches of disclosure obligations.

At the same time, what matters is whether the breach could have undermined the consumer’s ability to properly assess the scope of their obligation.

That is why our analysis is not limited to mechanically searching for errors. We examine their nature and significance for the specific agreement.

APR and the total cost of credit

One of the key elements of a consumer credit agreement is the APR, i.e. the annual percentage rate of charge.

It is meant to allow the consumer to assess the real cost of financing and compare different offers.

Errors in the APR may result, among other things, from incorrectly including individual costs or using incorrect assumptions in its calculation.

Finding a difference in the APR does not in itself determine whether the sanction applies. It is necessary to establish what the error results from and whether it constitutes a breach of the obligations set out in the Act.

Interest on commissions and other credit costs

Another important issue in consumer agreements is how commissions, insurance premiums and other costs were financed.

In practice, it happened that a certain cost was added to the amount financed and the lender then charged additional interest on that amount.

In 2026 the CJEU confirmed that the concepts of the total amount of credit and the total cost of credit are separate, and that the bank may not charge interest on amounts intended to cover costs related to the credit, such as certain premiums or fees.

Such provisions may be very important when analysing the agreement.

This does not, however, automatically mean that the free credit sanction will apply in every such case – the agreement as a whole and the legal basis of the specific claim must be assessed.

How do you use the free credit sanction?

The current rules require an appropriate statement to be submitted to the lender.

Before it is prepared, it is worth establishing precisely what the breach consists of and which provisions of the agreement give grounds for using the sanction.

We do not recommend submitting the statement solely on the basis of a template found on the internet.

First, we analyse the agreement, the cost documents and the repayment history. We then determine the legal basis and prepare a position for the lender.

If the bank or lending company does not accept the sanction, it may be possible to pursue claims in court.

Deadline for using the sanction

The right to use the free credit sanction is not unlimited in time.

Under the current rules, it expires one year after the date on which the agreement was performed.

In practice, establishing when the agreement was performed may require analysis, especially if the loan was repaid early, settled in an unusual way or certain obligations between the parties still exist.

For this reason, the question of the deadline should not be put off until many months have passed since the agreement ended.

Can you use the sanction for a repaid loan?

Repaying a loan does not always mean that the possibility of using the sanction has been automatically lost.

What matters primarily is the deadline provided for in the Act and the date on which the specific agreement was performed.

In the case of a loan already repaid, the potential claim may concern the return of interest, commissions or other costs paid to the lender, if the sanction was effectively applied.

In this case too, the documentation must be analysed first.

What documents do we need?

For an initial analysis, the following are particularly useful:

• the credit or loan agreement,

• the terms and conditions,

• attachments,

• the information form,

• the repayment schedule,

• the repayment history,

• information on commissions and insurance,

• annexes,

• documents concerning early repayment of the loan.

If the client does not have complete documentation, we establish which documents they should obtain from the lender.

Legal assistance in free credit sanction cases

The free credit sanction can significantly reduce the real cost of credit, but its application depends on meeting specific conditions.

That is why we start every case with a detailed analysis of the agreement instead of assuming in advance that the loan can be turned into free credit.

If we find grounds for applying the sanction, we help prepare the appropriate statement, determine the amount of the claim and conduct the further dispute with the lender.

Our aim is to establish whether the bank or other financial institution properly fulfilled its obligations towards the consumer and – if not – to make effective use of the protection provided by law.