When offering investment products, e.g. unit-linked life insurance, financial institutions are obliged to verify – in line with MIFID II – whether the product presented to consumers is adjusted to their financial needs, investment experience and knowledge, as well as the acceptable level of risk. In order to do this, they present their consumers with an adequacy survey to be filled in. If the results of the survey should indicate that the product fails to meet a given consumer’s needs, is too complicated or too risky for the consumer, the insurance institution should refrain from selling such an investment product and inform of the fact in writing. However, if the consumer should nonetheless choose to conclude such a contract, being aware of the risk and specific nature of the product, then they may do so only after submitting a written statement confirming that they have been informed of the inadequacy of the investment product offered.
As a result of notification by the Polish Financial Supervision Authority, after analysing in the course of the proceedings the unit-linked insurance contracts concluded between Open Life TU Życie S.A. and consumers as well as the adequacy surveys filled in by the consumers, the President of UOKiK, Tomasz Chróstny, issued a decision declaring that Open Life TU Życie S.A. had offered unit-linked life insurance to consumers with unit funds which failed to meet their needs (misselling).
In the course of the proceedings, it was determined that Open Life TU Życie S.A.:
- had suggested products with much riskier unit funds than the consumers wanted according to the survey when offering unit-linked insurance contracts; for example, when a consumer declared in the survey that they found moderate investment risk acceptable, the company would offer higher-risk unit funds;
- had concluded unit-linked insurance contracts with consumers for a term longer than indicated by the consumers, e.g. the customers said they were interested in a contract with a term of up to 10 years and Open Life TU Życie would offer a contract with a much longer term – e.g. until the customer reached the age of 85. Such practice could expose the consumers to the risk of loss as in the declared period for which they wanted to invest their money the selected funds could not only fail to bring the expected profit, but also generate losses due to the design of the product;
- had misled some consumers by offering them unit-linked insurance contracts which were inadequate for their needs and risk profile determined on the basis of the survey, while presenting them with a statement transferring to them the responsibility for the insurance company’s decision for signature and not informing them of the actual consequences.
“Offering consumers financial services which fail to meet their needs and risk profile is forbidden under the Polish and EU law. This constitutes an unfair practice which exposes the consumers to the risk of financial loss which is higher than acceptable for those consumers. It is also an example of irresponsible behaviour on part of the financial institution and abuse of the trust of customers, as they may reasonably expect that the insurance company – as an institution which enjoys public confidence – will offer them a product adjusted to their needs and risk profile. Open Life TU na Życie S.A. violated the collective interests of consumers and was fined more than 20 million zlotys for the unfair practices,” says Tomasz Chróstny, President of UOKiK.
The President of UOKiK decided that Open Life TU Życie had violated the collective interests of consumers and imposed on it a financial penalty amounting to more than PLN 20 million (PLN 20,011,600). The undertaking engaged in the impugned practices in the period from 2016 until the second half of 2018 in the case of misselling and until the end of 2018 in the case of misleading consumers. The decision is not final and the company may decide to appeal to a court of law.
