Compliance of the products with the applicable norms.
The Bank and the Group make every effort to ensure that all products offered meet the requirements set out in the provisions of the law, as well as the internal regulations and the accepted market standards. These efforts focus on ensuring that
- the products offered are appropriate to the needs of the customers to whom they are addressed;
- the manner and form of proposing the purchase of products is appropriate to their nature;
- before concluding the agreement, customers are provided with reliable, transparent and comprehensive information about the product, in particular its nature, design, conditions of performance of the agreement, benefits and risks, as well as fees, commissions and other costs related to the conclusion, performance and, possibly early termination of the agreement.
These rules apply not only to the Bank and entities from the Group, but also to companies to which the Bank has entrusted the performance of specific operations.
Managing the risk of inappropriate sales of the products to customers (misselling)
An example of the concern for ensuring compliance of the products with the applicable regulations is the elimination of the risk of misselling, performed at the stage of creating and introducing the product, and then at the stage of offering the product to customers. In accordance with the principles applied at the Bank of creating and introducing products into the Bank’s product range, each product introduced to the range is analysed for the risks it generates and the identification of target customer groups for the given product. PKO Bank Polski SA also identifies the group of customers to which the Bank should not propose the purchase of a given product because of the risk of misselling, the lack of adaptation of the product to the customer’s needs or for other reasons (the so-called anti-group). In such a case, the Bank implements actions, including systemic solutions reducing the risk of misselling. The next stage of eliminating the risk of misselling is during direct customer contact. Before presenting the product offering to a given customer, the Bank assesses the customer’s needs with regard to a given product, so that there is no risk of misselling (e.g., the sale of unemployment insurance in connection with a cash loan to pensioner). Additionally, the Bank always provides reliable and comprehensive information to customers so that they can make an informed choice of a specific product. The bank acquaints customers with the benefits as well as the risk arising from the purchase of individual products.
The Bank considers any irregularities reported by its customers, in particular in the form of a complaint, forthwith and, depending on the findings, takes steps to fix them, prevent them from taking place in the future and improving the quality of service (more in subchapter 3.3).
The risk of misselling products to customers is also managed by the Group’s entities: PKO Życie Towarzystwo Ubezpieczeń SA, PKO Bank Hipoteczny SA and the PKO BP Finat sp. z o.o. group.
Administrative proceedings
Four administrative proceedings were conducted at the Group in 2017 before the Office of Competition and Consumer Protection (UOKiK) regarding compliance of the Group’s products with the applicable regulations. They all applied to the Bank.
| Description of administrative proceedings pending or completed in 2017. | Status | |||
|---|---|---|---|---|
| THE BANK | ||||
| 1. Proceedings initiated by the President of the UOKiK ex officio regarding the Bank’s application of practices breaching collective consumer interests by providing notice of proposed changes to the terms and conditions of the payment service agreement exclusively with the use of electronic messages and failing to attach attachments (regulations and rates of the bank’s fees and charges to individuals) in the messages related to the Bank’s products, that is current accounts, credit and debit cards, payment cards, and therefore making it impossible for consumers to verify the acceptability of changing the terms of the agreement. | The proceedings are pending. The Bank responded to the allegations of the President of the UOKiK and submitted a motion to issue an obligating decision, together with proposals of actions intended to end the breach and remedy its consequences. The President of the UOKiK declared that he does not anticipate accepting the proposal of obligating the Bank at the current stage of the proceedings liabilities and pointed that the decision simultaneously issued in the meantime against Credit Agricole Bank Polska S.A. in a similar case should be an indication for PKO Bank Polski SA regarding the method of remedying the effects of the practices breaching collective consumer interests, the form of consumer augmentation, or the position of the President of the UOKiK related to a permanent medium of information in electronic banking. The President of the UOKiK announced his administrative decision ending the proceedings. | |||
| 2. Proceedings initiated by the President of the UOKiK ex officio on the Bank’s application of practices breaching collective consumer interests through the Bank’s use of contractual provisions in model agreements, annexes to loan and mortgage loan agreements which are revalued / indexed / denominated in foreign currencies and appendices thereto, which may be considered inadmissible in the context of Article 385 § 1 of the Polish Civil Code. | The proceedings are pending. The Bank responded to the allegations of the President of the UOKiK and filed a motion to take evidence from a document showing the stability of the CHF, EUR and USD exchange rates used by the Bank with respect to the exchange rate announced by the National Bank of Poland in the period in question, i.e. 3 January 2011 – 31 July 2017. The Bank supplemented the information at the request of the President of the UOKiK, giving the date of the day from which the specified contractual provisions of the appendix to the annex are applied by the Bank in the model agreements and the annexes to loan and mortgage loan agreements which are revalued / indexed / denominated in foreign currencies. The President of UOKiK extended the deadline for completion of the proceedings until 31/03/2018. | |||
| Description of administrative proceedings pending or completed in 2017. | Status | |||
| 3. Proceedings initiated by the President of the UOKiK ex officio on the Bank’s application of practices breaching collective consumer interests through linking the decision on releasing a consumer from monthly cost of the debit card with the settlement provided by the settlement agent and therefore being beyond the influence of the client. | The proceedings have been completed. The Bank submitted a motion to issue an obligating decision, together with proposals of actions intended to end the breach and remedy its consequences. The President of the UOKiK accepted the proposal and issued the obligating decision.The Bank has been obligated to provide the President of the UOKiK an information on implementing the decision and the confirmation of the Bank’s actions within 18 months from the validation date of the decision, that is from 22/12/2017. | |||
| 4. Proceedings initiated by the President of the UOKiK ex officio on the Bank applying practices breaching collective consumer interests by setting the level of instalments of principal and interest on loans secured with a mortgage and loans denominated in foreign currencies, as well as taking these instalments from consumers at a higher level than the cost of servicing the credit exposure presented to the consumer under the assumption that the zloty value of the principal amount of the credit exposure increases as a result of the appreciation of the foreign currency with respect to the zloty, the level of which was presented to consumers when concluding the loan agreements as a part of the information on forex risk and was described as the level of the potential increase, which arises from the original (present at the conclusion of the agreement) transfer to the consumer of the possible forex risk, which can simultaneously breach good practices and thereby distort the market behaviour of borrowers of these loans by forcing consumers to repay loan instalments at an unjustified amount, as well as by effectively preventing them from making early repayments, converting the currency of the loans, as well as terminating the agreements for these loans/mortgage loans because of the indexation of the liabilities of the borrowers up to a level that exceeds the potential increase in the costs of the credit exposure, which was presented at the time of conclusion of the agreement, which can constitute an unfair market practice, as referred to in Article 4, para. 1 of the Act on Counteracting Unfair Market Practices of 23 August 2007 and simultaneously strike at the collective interests of consumers. | The proceedings are pending. The Bank responded to the allegations of the President of the UOKiK, requesting the discontinuation of the proceedings due to launching it after the passage of the strict deadline or (alternatively) because of the irrelevance of the Bank’s alleged practice or (in the event of the failure to discontinue the proceedings) to take evidence from an expert opinion or a legal person (scientific unit) to present the circumstances specified in the Bank’s response. | |||
| OTHER ENTITIES FROM THE GROUP | ||||
| No proceedings. | ||||
Appropriate product labelling
The labelling of banking and investment products boils down to providing information to the customer about them. In the process of managing the risk of improper product labelling, the PKO Bank Polski SA Group, including PKO Bank Polski SA provides customers with access to all important information about the products offered, especially at the pre-contractual stage.
The scope of information provided about the products is specified by the applicable provisions of the law and the recommendations of the PFSA. The general rule is that the highest level of protection is available to retail customers – consumers. This information is formulated in such a way that it is understandable to the so-called “Average consumer”, namely – in accordance with the Act on Counteracting Unfair Market Practices – a consumer who is sufficiently well-informed, attentive and cautious. However, the scope of information provided to institutional customers, e.g. financial institutions is narrower because these entities are professional customers of financial products and services.
The Bank performs its statutory information obligations
a) in relation to deposit products, including by:
- informing customers about the principles of the deposit guarantee system;
- informing customers about the possibility of submitting instructions in the event of death;
- reminding customers about accounts held at the Bank, on which there have been no transactions for 10 years – in such a situation, the Bank provides appropriate information no later than 6 months before the end of the 10-year period in which there were no transactions on the account, indicating that the agreement will be terminated if there is no further activity;
- providing model agreements before the conclusion of the agreement and during the agreement, at the consumer’s every request.
b) in relation to investment products, including by:
- providing the required information arising from the MiFID Regulation (including in the form of an Information Brochure on the Requirements of MiFID for customers of Powszechna Kasa Oszczędności Bank Polski Spółka Akcyjna);
- the provision of the “Key Information Document” (so-called “KID”) to customers before concluding the agreement/transaction, in accordance with the requirements of Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs);
- providing model agreements before the conclusion of the agreement and during the agreement, at the consumer’s every request.
c) in relation to loan products (requirements of the act on consumer credit, the mortgage loan act and supervision over mortgage brokers and agents), including by:
- providing an information form to consumers at the pre-contractual stage, together with a personalized loan agreement and, in the case of applying for a mortgage loan – also a loan decision;
- providing general information on the mortgage loan agreement to consumers at any time;
- informing the consumer who is late in repaying the loan liability, about the ability to submit a debt restructuring request.
d) in relation to insurance products (requirements of the act on insurance agencies and recommendations of the PFSA regarding good bancassurance practices), including by:
- showing customers a power of attorney document and, in the case of natural persons performing agency activities, a document authorizing it to represent the insurance agent, at the time of performing the first agency activity and at every request;
- notifying customers as to whether it is representing one or multiple insurance companies;
- informing clients about the entry into the register of insurance agents and the method of checking the entry in the register and about the stocks or shares held in the insurance company entitling him to at least 10% of the votes at the general meeting;
- providing information to customers on the contractual provisions regarding their rights and obligations related to granting insurance protection, including the provision of an information card about an insurance product.
The principles of proper product labelling also apply to advertising messages. The Bank conducts marketing activities, intending, in particular, to support sales activities, strengthen the brand and shape its positive and coherent image. It pays particular attention to the fact that the messages that are communicated are formulated reliably and do not mislead their recipients. In accordance with the rules in force at the Bank, the advertising message should clearly indicate which product or service it applies to and should respect the generally applicable provisions of the law (e.g. the act on consumer credit regarding advertising of loans of this type). Marketing materials additionally take into account market standards and the expectations of the PFSA expressed, among others, in the Rules of advertising banking services issued by the PFSA.
