Full definition
The free-credit sanction is the strongest civil penalty in Polish consumer-protection law, codified in art. 45 of the Consumer Credit Act of 12 May 2011. If the lender breaches specific disclosure obligations (missing mandatory contract elements, incorrect RRSO, undisclosed fees, failure to hand over a contract copy), the consumer may invoke the sanction in writing. Effect: the obligation is stripped of all costs (interest, fees, insurance, charges) — the consumer repays only the principal. The window to invoke is 1 year from the last scheduled payment. Applies to consumer credit up to 255,550 PLN. In practice many contracts contain formal defects — more consumers are suing banks based on SKD.
Concrete numeric example
A 40,000 PLN loan over 5 years; interest + fees paid totalled 12,800 PLN. The consumer proves the bank disclosed RRSO incorrectly (0.3 p.p. off). After the court case the bank refunds 12,800 PLN and the consumer repays only outstanding principal.