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Credit Union law ruled unconstititional

PR dla Zagranicy
Jo Harper 31.07.2015 18:20
The Constitutional Tribunal ruled on Friday that legislation from 2009 and 2013 governing Poland's credit unions (aka SKOKs) is unconstitutional.
The judge leading the Constitutional Tribunal Leon Kieres directs proceedings at the Constitutional Tribunal in Warsaw, 31 July. Photo: PAP/Tomasz Gzell The judge leading the Constitutional Tribunal Leon Kieres directs proceedings at the Constitutional Tribunal in Warsaw, 31 July. Photo: PAP/Tomasz Gzell

However, during an extended three-day sitting at which the tribunal looked at four SKOK cases directed to it by President Bronisław Komorowski, two groups of opposition party Law and Justice (PiS) MPs and PiS senators, the tribunal ruled that regulations governing SKOKs were “legal, necessary and [had been] non-arbitrary.”

"The basic financial supervisory framework overseen by the Financial Regulator (KNF) is sound," the judge leading the Constitutional Tribunal Leon Kieres said.

The Constitutional Tribunal made its ruling after an audit earlier this year revealed the SKOKs were in the red. Many of the 55 national credit unions, originally designed to allow mainly poorer Poles without bank accounts to deposit and borrow money, have run into financial trouble and been criticised for poor management and weak supervision.

Reportedly almost half of them are close to bankruptcy, putting a strain on the banking bailout fund – the Banking Guarantee Fund. Some SKOKs are being taken over by banks, and the deposits of others will be paid by the fund.

Polish Prime Minister earlier said the credit unions constitute a burden on public finances. There were also allegations that a number of SKOKs were used by businessmen close to the opposition PIS party as a source of funding for PIS. According to observers, in an election year the issue is one that plays into questions of fiscal reponsibility and regulatory probity, with opposition parties in turn accusing the government of "wasting tax-payers' money" due to a badly managed regulatory regime.

The tribunal ruled that parliament now has 18 months to amend the “partially faulty” legislation governing SKOKs, which account for only 1.1 percent of all banking sector assets.

“Legislation should allow for adjustments in the law on the Cooperative Savings and Credit Unions (SKOK) commensurate with the size, among other things, of their activities,” Kieres said.

“The aim of the KNF’s activity is to safeguard SKOK members and for stability of the financial market,” KNF spokesperson, Łukasz Dajnowicz, said after the ruling.

Dajnowicz explained that both the credit unions and regular banks should be regulated using analogous instruments adapted proportionally to the size of the deposits made.

The SKOK's have about two million members and at the end of March deposits worth PLN 11.7 billion (about USD 3.2 billion). (jh/rk)

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