Poland - Life annuity - unfair practices
Fundusz Hipoteczny Dom (Mortgage Trust “Dom”) joint stock company, has been found to provide misleading information on the rules concerning annuity payouts. The President of UOKiK has ordered the company to change its practices, imposing a penalty of over PLN 40 thousand (ca. EUR 10 000). Fundusz Hipoteczny Dom (Mortgage Trust “Dom”), a limited joint-stock partnership, restricted the right of senior citizens to live with their loved ones, which has been challenged by UOKiK, too. “Dom” has undertaken to discontinue this unfair practice.
On its website, Fundusz Hipoteczny Dom (Mortgage Trust "Dom") joint-stock company is advertising a product called a life annuity. Such offers are addressed to senior citizens who, in exchange for ownership rights to their flat, receive an annuity, usually paid once a month. The annuitant may continue living in the flat till the end of his or her life (easement of habitation).
In September 2013, UOKiK instituted two proceedings. The first proceedings were against the Mortgage Trust "Dom" joint stock company as an entity advertising the mortgage life annuity. The second proceedings were instituted against its business partner – Fundusz Hipoteczny Dom (Mortgage Trust “Dom”) limited joint stock partnership, which concluded annuity mortgage agreements with senior citizens. The first proceedings revealed that the website of the Mortgage Trust “Dom” joint stock company (funduszhipoteczny.pl) contained information (in the browser tab Questions and answers) suggesting that irrespective of the annuity paid to the consumer, the new owner would also pay rent for the property thus transferred. As a result, senior citizens may have accepted the offer because they were convinced that the rent would be paid from separate funds, in addition to the annuity payout. In real fact, however, rent is not paid as a separate benefit, but from the annuity payout, ultimately reducing the amount paid directly to customers. In the opinion of UOKiK, the Mortgage Trust “Dom” joint stock company misled consumers into thinking that the terms and conditions of the agreement were more attractive than they actually were.
Misleading consumers is considered an unlawful and unfair market practice. Senior citizens, to whom this particular offer is addressed, are particularly vulnerable to such practices, because they are usually more susceptible to persuasion and they are often not aware of the rights to which they are entitled, as confirmed by opinion surveys ordered by UOKiK.
The President of UOKiK has instructed the Mortgage Trust “Dom” joint stock company to discontinue the practice objected to, imposing a penalty of PLN 43 464 (ca. EUR 10 866). The decision is not final, as the company may appeal against it in court.
The proceedings against the Mortgage Trust “Dom” limited joint stock partnership revealed that its standard agreements contained an abusive clause under which a customer who wanted someone to live with him or her could only do so after obtaining written consent of the company. In accordance with the law, however, a customer of the Mortgage Trust “Dom” limited joint stock partnership, as a person who has the right of habitation, does not need anyone's consent for the moving in of a spouse, minor child or any other dependant or a person whom he or she needs as a domestic helper.
Fundusz Hipoteczny Dom (The Mortgage Trust “Dom”) limited joint stock partnership has undertaken to discontinue the prohibited practice by removing the provision in question from agreements concluded with new customers. It has also undertaken to offer all existing customers an annex to their agreements to rectify that problem.
In 2013, UOKiK compiled a report on practices of undertakings offering the so-called life annuity. Consumers who are interested in concluding a life annuity agreement may find information about their rights in a special guide. Free advice on ways of seeking remedies may be obtained from poviat or municipal consumer ombudsmen or under the telephone number 800 007 707 from Monday to Friday, between 9 a.m. and 5 p.m. Advice may also be sought from branch offices of the Consumer Federation. To obtain assistance of experts, free of charge, you may also send your queries to the e-mail address of the Association of Polish Consumers: porady@dlakonsumentow.pl.
Read the press release in Polish.