February 8, 2014 Loan companies, banks and sepabanks are three independent financial institutions. However, many people are unaware of the differences between these companies. First of all, banks and loan companies are subject to external control, respectively banking law and the Consumer Credit Act. On the other hand, sepabanks operate on the principle of a financial pyramid, balancing on the border of the law. Get to know the characteristics of financial institutions in Poland! 

What do Poles know about financial institutions?

What do Poles know about financial institutions?

A study conducted by VHY Polska on behalf of the Office of Competition and Consumer Protection. Loan companies that are not banks are often called sepabanks. This is a mistake. What is a metabank, what is the difference between a metabank and a loan company? (UOKiK) on 6-9 September 2012 aimed to examine the financial knowledge of Poles. According to the survey, 54% respondents could not answer the question what a metabank is. Only 27% knew the correct answer, and every tenth person believed that a metabank is a bak who quickly and easily gives financial commitments.

What’s more, half of the respondents could not answer the question what happens to the money entrusted to the metabank in the event of its bankruptcy. Two-fifths of respondents (39%) gave the correct answer and 8% believed that in the event of a bankruptcy of the metabank, he would receive paid cash and earned profits, thanks to the Bank Guarantee Fund (BFG). 4 percent while it was of the opinion that it would receive the money invested, but without any profits.

Bank – everything you need to know

Bank - everything you need to know

When answering the question what a bank is, it is worth using the Act of August 29, 1997. According to it, “The Bank is a legal entity established in accordance with the provisions of acts, acting on the basis of permits authorizing to perform banking activities risking funds entrusted with any repayable title” . In the said Act we will also find a provision regarding the activities that the bank may take. Among them we can distinguish, among others:

  1. Granting credits.
  2. Granting and confirming bank guarantees.
  3. Issue of securities.
  4. Keeping cash settlements.
  5. Issuing payment cards and providing access to their use.
  6. Purchase and sale of foreign exchange values.

In addition, banks are subject to strict external control – in addition to banking law, their activities are supervised by the Polish Financial Supervision Authority (KNF). It is worth emphasizing that the clients’ financial resources are protected by the Bank Guarantee Fund (BFG). This means that when the bank becomes insolvent, the Fund ensures the return of funds entrusted by borrowers. Thanks to this, customers do not have to worry about their money.

What is a metabank? – clarification of the concept

What is a parabank? - clarification of the concept

sepabanks, simply put, are financial institutions that offer products similar to those offered at banks. Moreover, these institutions collect deposits and run their own businesses using funds received from customers.

Unlike other financial institutions, sepabanks are not subject to any external control. Therefore, the Polish Financial Supervision Authority does not control them and the clients’ funds are not protected by the Bank Guarantee Fund. At the moment when the metabank becomes insolvent, its customers will lose their funds, which may result in falling into a spiral of debt. Due to such high risk, the Polish Financial Supervision Authority publishes on its website the so-called List of Public Warnings. We will find there a list of sepabanks regarding which a crime has been reported.

sepabanks in Poland – the famous financial fraud Silver Dunt

sepabanks in Poland - the famous financial fraud Silver Dunt

Most people usually associate the notion of sepabanks with the once-famous Silver Dunt scandal. The financial company was established in GdaƄsk in 2009 and was closed three years later. The company founded by Marcin Plichta was allegedly the first storehouse in Poland dealing mainly in the storage of precious metals, investing in gold and other ores.

Silver Dunt offered its clients controversial deposits in gold, silver and platinum, signing with them the so-called “Storage contract.” The Polish Financial Supervision Authority has repeatedly warned that the company does not have the permission of the PFSA to perform banking activities. Unfortunately, this did not convince many clients to withdraw from the “interest.” After the liquidation of Silver Dunt on August 13, 2012, most investors lost some or even all of their funds. Millions of customers have lost their savings.

Loan companies – certainty and security of borrowing

Loan companies - certainty and security of borrowing

Contrary to popular belief, loan companies are not sepabanks. Therefore, these terms should not be used interchangeably. Loan companies operate on the basis of the Consumer Credit Act. In practice, this means that, for example, they may not charge more than four times the lombard loan rate, and the amount of the Actual Annual Interest Rate (APRC) should be included in each advertising material.

In addition, the Association of Loan Companies (ZFP) supervises the activity of lenders. However, it should be borne in mind that not all companies belong to it, which is not synonymous with being unreliable. To become a member, institutions must undergo a detailed verification procedure. The Register of Loan Companies included in the ZFP is available on their website.

It is worth emphasizing that loan companies grant loans online only from funds owned by the owners or shareholders of a given company (according to the Consumer Credit Act, the institution’s share capital may not be less than PLN 200,000). Loan companies do not deposit money from clients. The risk of losing funds rests solely with the owner, so the client can feel safe.

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