In the past week, the Polish Financial Supervision Authority (KNF) hosted a meeting with representatives of companies operating in the Polish market that hold a national payment institution license. Although formally, the meeting was not related to the case of Conotoxia from the Cinkciarz group, which has just had its license revoked, it is an open secret that the problems of this fintech prompted the regulator to organize the meeting.

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One of the main topics discussed during the meeting was the content of the statements that the representatives of KIPs got to sign from the supervision already after the revocation of Conotoxia's license. "It seems that the supervisor is concerned about finding out whether the KIPs operating in our market are not making the same mistake that was the reason for the revocation of Conotoxia's license. It is therefore keen to be assured that KIPs have the funds of all their clients secured and can withdraw them at any time at their request,’ one of the participants in the meeting, who asked not to be named, told me.

It will be recalled that one of the most prominent online exchange offices on the Polish market was, at the same time, through one of the companies in the group, operating in payment services, which its KIP license allowed it to do. Thus, it offered payment accounts for which it issued multi-currency cards. For several weeks, its customers complained about delays in transfers with foreign exchange money. This coincided with an inspection that the KNF had initiated at Conotoxia. In the course, it emerged that the company had a problem complying with specific provisions of the Payment Services Act regarding not storing technical and operational money (i.e., its own money and money belonging to customers) in duplicate accounts.

As a result, after an inspection, the KNF decided to revoke the Cinkciarz group company's license to operate as a KIP, i.e., issue cards, maintain payment accounts, etc. It did not apply to the operation of an online exchange office, as this one in Poland is not supervised by any state institution. However, during the Cinkciarz case, the supervision realized that other KIPs might have problems storing clients' funds similarly. Hence, other payment institutions are requested to sign statements.

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Only that the content of the statement, presented to the KIPs to sign, aroused much controversy. To put it mildly, according to a participant in a meeting at the FSC, it abstracted from market realities. Representatives of payment institutions, therefore, raised the argument that it was incompatible with the Payment Services Act. This, however, has not been confirmed by KNF spokesman Jacek Barszczewski. "Under Article 102(1)(1) of the Payment Services Act, the KNF, as part of its supervision mission, may call upon a domestic payment institution to provide, within a specified period, any information necessary for the performance of its supervision objectives", the KNF spokesman wrote in response to my request for comment.

The representatives of KIPs with whom I spoke do not dispute the provision quoted by Jacek Barszczewski. Instead, they stress the need for precise regulations, as the Payment Services Act's lack of clarity is causing interpretation problems. They cite the difficulty in properly defining the so-called money on the way, i.e. transfers that have already been ordered by a payment institution, but have not yet been credited to the recipient's account.
As per my information, payment institutions are signing statements prepared by the KNF, but with numerous reservations and comments of their own. KIPs are now apprehensive that, due to these reservations, the supervision could accuse them of violating the Payment Services Act, leading to far-reaching consequences. The problems of one fintech, Cinkciarz, could potentially affect the entire market.

Meanwhile, Cinkciarz has been publishing massive amounts of information for several days about further lawsuits it intends to file against banks, allegedly to obstruct its business illegally. You could read about most of them in the text ‘Cinkciarz does not stop. Accuses banks of collusion and threatens further lawsuits'. Yesterday, the company added a notice of bank collusion to the set described there, hitting the SGB group and Citi.