Poland - Unit-linked life insurance products of Getin Noble Bank - two decisions of UOKiK

- The lady at the bank talked at length of the advantages of the product. She said that it was completely safe and that there was no financial risk involved – this is just one of a large number of complaints sent to the Office of Competition and Consumer Protection (UOKiK). The President of UOKiK decided that Getin Noble Bank had acted in contravention of the law by providing misleading information to customers concluding agreements associated with its long-term investment and insurance product. The bank failed to inform its customers of key features of that product, i.e. that it involved the risk of losing some or even all savings and that the cost of terminating the agreement was very high. The penalties imposed on the company totalled over PLN 6.7 million (ca 26.8 mln EUR).

UOKiK has received a large number of consumer complaints relating to investment and savings products: life endowment insurance with an investment element – unit-linked life insurance (pl. polisolokaty). The agreement is concluded for many years. The consumer makes a one-time payment or several payments at specified intervals. The amounts paid in are invested in unit-linked insurance products. The investment may bring a profit after as many as 10 or 15 years, but it may just as well bring a loss. Most consumers complained that those products had been presented to them as a standard deposit or short-term insurance. Many people concluding an agreement are not aware that they may lose their savings if they withdraw from it prematurely. Neither are they aware that the profit depends on the investment risk involved. The President of UOKiK is looking into this matter, with 10 proceedings being currently conducted. The first two decisions relating to that market have just been issued. Both concern Getin Noble Bank. The main point of concern was the misleading information provided by the bank’s employees and contained in its advertising leaflets. The penalties imposed on the company totalled over PLN 6.7 million (ca 26.8 mln EUR)

Information provided by employees – the first decision

The Office of Competition and Consumer Protection has been conducting the proceedings since November 2012, having analysed nearly 100 complaints received from consumers. In addition, UOKiK has collected a body of evidence, including information on the number of complaints submitted to the bank in connection with this product. In the period from September 2009 to May 2013 alone, Getin Noble Bank received several thousands of such complaints. Moreover, UOKiK has analysed proposals of training modalities for employees of the bank and its franchised branch offices concerning methods of selling long-term investment and savings products, including how to talk to customers.  

The portfolio of life endowment products with unit-linked insurance policies was presented to consumers who wished to open a deposit account or renew an agreement. UOKiK has established that the bank's employees and its business partners misled customers into thinking that they were choosing a safe product generating a high profit. The offered solution was presented as more advantageous than standard term deposits. The profit and the safety of the product were mentioned frequently to encourage consumers to purchase it, as confirmed by consumer complaints – Presenting this investment offer, the bank clerk used the term Savings Account, which made me believe that my money would be invested in a safe way. The very word 'saving' is associated with putting money aside and not losing it. In the opinion of UOKiK, the bank’s employees failed to provide consumers with clear information on the risk associated with concluding an agreement for a long-term investment and savings product. Neither were consumers told that they could lose their savings if they terminated the agreement before the end of its term.

The bank’s employees assured customers that their profit would be higher than from standard products. The prospect of earning a larger amount of cash had the most significant impact on decisions taken by customers. The bank’s sales staff highlighted the advantages of the product and referred to the amounts that would be paid after 15 years of saving, presenting figures, tables and graphs to support their arguments. In their complaints, consumers said that those analyses, data and calculations had made them believe that they had been taking a rational decision. No clear answer was given to questions about money withdrawal options or the long term of the agreement. It was not made explicit that there was a risk of losing all savings or that the costs of terminating the agreement were so high.

According to UOKiK, every customer has the right to be informed about the key features of the product. Employees of banks must provide customers with clear, unambiguous and non-misleading information. In that information, the advantages and risks must be equally taken into account. Contrary to accepted principles of business ethics, essential features of the product were concealed from customers. Getin Noble Bank has been fined PLN 5 658 465 million (ca EUR 22, 6 mln) for having misled its customers. In addition, the President of UOKiK has ordered the bank to publish the operative part of the decision on its website. The company has discontinued the practices objected to.

Advertising leaflets – second decision

Since October 2012 UOKiK has been also examining the advertising materials of Getin Noble Bank. As stated in a just-issued decision, the bank failed to provide essential information on the risks associated with investing money in long-term investment and savings products. This time, the President of UOKiK expressed her objections with respect to the leaflets advertising life endowment insurance with unit-linked insurance policies: Lucro and the Savings Plan 'Safe Future' (Plan Oszczędnościowy Bezpieczna Przyszłość, POBP). The leaflets were distributed in branch offices of Getin Noble Bank and its franchise outlets. The slogans advertising unit-linked insurance policies were as follows – Earn a profit in a safe and steady manner with 100% protection of your capital** or Top up your pension. In addition, both leaflets contained calculations of anticipated profits. The leaflets focused on the advantages, while the information on the risk of losing one's savings was written in a small print and in an unclear banking jargon. UOKiK concluded that the bank’s customers had not received reliable information about the risk of losing their savings if they opted out of the insurance too early. Getin Noble Bank has been fined PLN 1 131 693 (ca EUR 4,5 mln)thousand for infringing the collective interests of consumers. The bank is no longer using the leaflets concerned.

Both decisions are not final as the bank may appeal against it in court.