Risk of misselling, i.e. the risk of dishonest communication with clients regarding the PZU Group’s offers to purchase products that do not meet their needs or do so in a manner that is not suitable to their nature.
The PZU Group implemented policies for the fair design and sale of financial products and services. In addition, according to the Act on Insurance Distribution, an analysis of the client needs is conducted before offering an insurance contract, based on which the client’s needs are determined and products are recommended. Control mechanisms for this process were also implemented, including mystery shopping and sales observations.
Rules of product management system of PZU and PZU Życie.
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Product design
The PZU Group wants for its clients to insure themselves, invest and use financial services in a responsible manner – to make deliberate decisions with a grasp of the nature and mechanisms of the products they purchase.
All Group products and services are meticulously checked by experts before they can be proposed to clients. Lawyers and employees of the Compliance Department ensure that no clause in any agreement violates client interests, and that the entirety is compliant with current case law regarding consumer rights.
The transparency of the Group’s insurance products is ensured by the provisions of the Insurance Distribution Act of 15 December 2017 which entered into force in 2018 and was later amended. The Act is the effect of implementation into the Polish legal order of Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (Insurance Distribution Directive). The above is further complemented by the requirements of the regulatory authority applicable in PZU, in particular the Recommendations of the Polish Financial Supervision Authority concerning the product management system, product appropriateness tests and insurance distribution.
All insurance companies of the PZU Group (to the extent appropriate to their operations) fully comply with the relevant standards, in particular those resulting from:
- Commission Implementing Regulation (EU) 2017/1469 of 11 August 2017 laying down a standardized presentation format for the insurance product information document – the so-called IPID (Insurance Product Information Document),
- Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents. Consequently, the Key Information Document (KID) accompanies all products for which this is required according to the regulation, chiefly insurance-based investment products and life and endowment insurance policies.
As a result, clients are provided with information that is important to them in an understandable and synthetic format, which enables them to both understand and compare the products offered on the market. Documents are provided as part of the sales process and can also be found on the product websites of PZU Group companies (pzu.pl, link4.pl).
Changes in ESG came into effect in 2022 under the Commission Delegated Regulation (EU) 2021/1257 of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products. Under this Regulation, PZU and PZU Życie need to consider sustainable development conditions when creating a new product or materially modifying existing ones. Moreover, required changes were introduced to PZU Życie investment products in terms of client preference surveys on sustainable development.
Violations of principles of fair competition
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PZU and PZU Życie apply the “Principles regarding the product management system” defining the key requirements and activities to be performed at each stage of the product life cycle to ensure that the developed and distributed products meet the needs and requirements of the target client groups.
| The number of proceedings underway against the Group in the reporting year pertaining to violations of principles of fair competition | ||
| 2021 | 2022 | |
| PZU Group, including: | 4 | 2 |
| – PZU | 0 | 0 |
| – PZU Życie | 0 | 0 |
Regulations in subsidiaries
TUW PZUW carries out regular reviews of the existing products and services (including those offered by third parties) to assess whether they still bring benefits to consumers. In the first quarter of each year, TUW PZUW prepares collective information on satisfaction of clients’ expectations regarding individual products, analyzing in detail any comments regarding service and contract transparency. Monitoring is the basis for preparation of an assessment of adequacy and introduction of increasingly better solutions. This is also supported by the annual analysis of complaints from the perspective of the product and service and the applied procedures, and the findings and recommendations are reflected in a comprehensive report. On this basis TUW PZUW works out and regularly implements solutions aimed at further improvement of quality. The obligation to offer products responsibly in TUW PZUW is laid down in the scope of duties of the Management Board of the Mutual Insurance Company.
All foreign companies also have in place appropriate procedures in the area of product development and sales. Lietuvos Draudimas, operating in Lithuania, in addition to the procedure for launching new services, applies an insurance product policy that defines the processes and basis for the development and modification of insurance products that should ensure the company’s compliance with applicable laws and regulations. The Latvian company, AAS Balta, has in place guidelines for communicating with clients, which are intended to define the general principles of communication with the company’s current and prospective clients. It also applies policies for identifying client needs and managing product changes and development. The companies in Ukraine implement corporate sales policies defining the business rules for providing insurance services to corporate clients, as well as direct sales policies describing the rules for organizing direct sales at all stages.
Banks operating within the PZU Group make sure that the products and services they offer are available to people who genuinely need them and for whom they can be of real benefit. In accordance with generally applicable laws and regulations, both at Bank Pekao and at Pekao Group companies offering financial products and services, there is a number of regulations defining the business standard, as well as establishing rules of conduct in order to protect clients’ interests, and to mitigate compliance and reputation risks connected with the sale of products and services to consumers. At Bank Pekao, this area is covered in a comprehensive manner by the Policy for new product deployment and the Rules for creating marketing communication. The standards of offering and sales are further defined in: the Rules of selling credit and payment products to consumers and the Policy for the sale of investment products.
The risk of misleading the client with respect to the product designation is managed through ongoing reviews, i.e. through the process of evaluating marketing materials by, among others, the Compliance Department. The process of providing opinions on marketing materials and business instructions is covered by the Bank’s Internal Control System.
Alior Bank applies the Policy of preventing dishonest sales in order to counteract the practice of misselling. The document lays down the rules that must be applied in the process of designing and distributing products. The sales processes are subject to regular monitoring for the threat of misselling. There are defined rules of handling identified cases of inappropriate sales.
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Internal requirements concerning the labeling of products and services and information regarding the
All of the PZU Group products belonging to the four major product categories (life insurance, non-life insurance, health and investment products) satisfy the statutory requirements:
- within the scope of general policy conditions: the PZU Group directly applies the Insurance and Reinsurance Activity Act. Additionally, the product development procedures refer to a clause on the mandatory preparation of general terms and conditions of insurance;
- with respect to KID (Key Information Document) for investment insurance – the PZU Group directly applies the PRIIP regulation and the product development procedure;
- with respect to the Insurance Product Information Document (IPID), for non-life insurance – the PZU Group directly applies the clauses of the Insurance Distribution Act as well as the principles regarding the product management system and the product development procedure.
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Since 2018, no failures to comply with regulations or codes concerning the labeling of products and services or marketing communication have been reported in PZU and PZU Życie.
Advertising ethics
Compliance risk concerning the generally prevailing laws and guidelines of state authorities and reputational risk.
The Marketing Department uses the practice of verification of planned marketing messages prior to their publication in terms of their transparency, authenticity and accuracy of information contained therein with other PZU entities. The marketing activities are particularly consulted with the Legal Department and the Compliance Department (for compliance risk, including compliance with the law – risk of misleading the consumer, use of messages infringing the addressees’ interests) and pertinent departments responsible for a given product (consistency of the message with the facts – risk of misleading consumers).
Code of Ethics in Advertising; Rules for giving opinions on marketing activities and activities in internal and corporate communication.
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Code of Ethics in Advertising
The main rules in the Code:
- advertising does not contain discriminatory contents, respects human dignity and does not challenge animal rights,
- the message is not misleading and does not take advantage of the clients’ ignorance,
- data presented in advertising are true and documented.
The Code also regulates the event sponsoring rules. It clearly stipulates that they may not infringe good practices, expose facilities of historical or artistic importance to harm, or exert negative impact on the natural environment.
Responsible marketing communication is also supported by:
- The Marketing Policy which defines the aims, standards and principles of conducting marketing activity in the PZU Group. It focuses on ensuring consistency of all marketing activity and the message, as well as compliance with the prevailing provisions of law, in particular with the regulations on protection of competition and consumers and fighting unfair competition, as well as the guidelines of public authorities.
- The Rules for giving opinions on marketing activities and activities in internal and corporate communication, which regulate the procedure for issuing opinions by the Compliance Department on marketing materials in terms of compliance risk.
Best practices of PZU and PZU Życie
Marking cooperation with opinion leaders (influencers) on Instagram in the form of GIFs
We prepared unique GIFs in order to satisfy the current guidelines of the Office for Competition and Consumer Protection (UOKIK) on the applicable rules for marking advertising cooperation between brands and opinion leaders (influencers). They are used to mark on Instagram influencer collaborations with PZU. This out-of-the-box solution, which meets UOKIK’s requirements is also visually attractive.
Best practices of PZU and PZU Życie
Agent Ad Generator – online platform offering templates of advertising materials
In an attempt to ensure consistency and correctness of its marketing message, PZU actively supports agents by providing them with tools that effectively enhance their work environment, i.e. the Agent Ad Generator. This application contains ad templates (e.g. flyers, banners, billboards, print ads, etc.) that can be filled in by the agents with their contact details. The standardized advertising templates that cover a wide range of products and offer multiple formats. As a result, we ensure:
- high quality of materials used by the agents;
- consistent communication;
- compliance with the law;
- optimization of the material development process;
- time-saving and new opportunities for agents.
Best practices of PZU and PZU Życie
Tool improving experience of clients visiting the PZU website
The pzu.pl is visited 20 million times a year on average. Clients want to find information quickly, therefore simple navigation and site readability are important. PZU implemented a solution that analyzes user behavior on the website and thus allows to implement changes to improve the visitor’s experience. The tool provides precise information on client behavior and helps optimize the product, sales and marketing content presented. The technology combines qualitative and quantitative data using neuromarketing and behavioral analysis. The solution also positively impacts the number of contact details left by potential customers through the PZU website.
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In accordance with the applicable internal regulations, marketing and advertising activities carried out by Bank Pekao and Pekao Group take into account the provisions of generally applicable laws and guidelines of the regulatory authorities, the principles of fair trading in the financial market, good practices and clients’ declarations of will concerning such activities. Moreover, they are carried out in compliance with the Bank’s communication strategy, in keeping with the visual identity and image, the adopted internal regulations and with respect to the clarity of communication. The key regulations in this area in terms of assessing compliance risk are referred to in the Policy for new product deployment and the Rules for creating marketing communication, and they were prepared in connection with the decision of the Bank’s Management Board to adopt the Corporate Governance Rules for Regulated Institutions. Among other things, these regulations take into account the basic requirements for the content of marketing and advertising materials, taking into account the nature and specifics of the product in question, including: consumer credit, mortgage credit, bank account (in particular, savings account, savings and checking account or savings term deposit account), insurance product, as well as investment product.
Bank Pekao adheres to the Code of Banking Ethics of the Polish Bank Association and the Best Practices of the Financial Market adopted by the Polish Financial Supervision Authority. The key regulations in this respect include the Policy for new product deployment and the Rules for creating marketing communication. The Code of Conduct in the Pekao Group emphasizes that each employee is an ambassador of the products and services offered both by Bank and other Pekao Group entities.
Bank Pekao makes every effort to ensure that the advertising message does not undermine public confidence in advertising activities, does not contain content or images that offend commonly applicable moral norms, does not abuse client confidence by exploiting clients’ lack of experience or knowledge, does not appeal to fear, does not contain elements that could lead to or encourage acts of violence and, finally, does not condone discrimination, in particular on the grounds of race, religion or gender.
In Alior Bank S.A., the advertising ethics issues are covered by the Code of Conduct in Alior Bank. In accordance with the Code, the bank’s communication is open and transparent with a view to strengthening its reliability and clients’ trust. All promotional and advertising activities are in compliance with applicable laws, impeccable in ethical terms and in accordance with best market practices. The bank informs about its products and services in a reliable, unambiguous and impartial manner, and the form of presentation is not misleading. The content and message are easily understandable for all audiences. In its message to its clients, the bank does not overstate the benefits in an effort to downplay the costs and risks associated with acquiring a particular product or service.
Plain language
The PZU Group makes sure to have honest relations with associates, clients and business partners that are based on trust. Thus, the foundations of effective communication of PZU are based in clear and understandable language. Leading simplifying communications, PZU does not only set language standards and change communication, but also educates and shares experiences.
At PZU, plain language is important both in internal and external communication. The plain language work model is based on people and strategy. Every employee is responsible for clear and friendly communication, which is determined in the “Effective communication management policy” approved by the Management Board. In line with this document, the Plain Language Department of PZU is the unit responsible for effective communication – it supports employees, coordinates processes for simplifying communication, educates, promotes plain language and reports on the state of language in the organization. The Policy is appended with the „Standards for Communication at the PZU”. This is not only a set of rules of simple language, but also specific solutions for correspondence standards – with the client and within the organization, traditional and electronic.
Training and education
Every PZU employee can participate in plain language trainings. They take various forms: onboarding, e-learning, open training, with external experts, workshops and consultations. During practice sessions, participants simplify complex content and announcements, which may be used later on in their areas. Over 1,220 people participated in 2022 training sessions.
The Plain Language Department popularizes the principles of plain Polish in internal communications through articles and tutorials on the intranet or columns in the “Świat PZU” magazine. These are cyclical activities, so employees regularly receive educational materials. For several years now, the Plain Language Department has been publishing a language handbook “PZU. To proste”. In November 2022, readers had the opportunity to read its 100th edition. At the end of each month, the Department prepares language puzzles. Through them, employees can not only test their knowledge, but also learn something new about language and effective communication.
In mature markets, it is increasingly difficult to compete in terms of price or quality. In this situation, a company’s advantage can be the simple, understandable and friendly language we use to speak to the client. Plain language speeds up getting things done, and reduces the room for misunderstanding and overinterpretation
Employees of the Plain Language Department take care on a daily basis to simplify the message that goes out. They design content, revise documents and client communications so that they are approachable and do not raise doubts about intentions. They also work on the aesthetics – simple content is well-designed content. The Department cooperates with business teams – they get to know the specifics of the area, then provide guidance and language recommendations. It also conducts a content audit. In doing so, it relies on digital tools, such as the Logios program, developed at the University of Wroclaw. After the research, the office starts working together with the business – there are trainings, workshops, content design and system implementations.
Conferences on plain language are an important point on the map of educational events at PZU. They have been held for six years and are very popular among employees. In 2022, business and science experts discussed how to communicate better and effectively in a hybrid world. The event was held on-site and on-line, and was attended by more than 1,500 people.
PZU also promotes plain language in the media and at industry events. In 2022, representatives of the Plain Language Department discussed plain language and business communication at the 590 Congress and the Plain Language Forum, among others. They also talked about how they are changing communication during a lecture for future simplifiers – students of the Plain Language Circle at the University of Warsaw.
In order to share good practices, the Plain Language Department made the „Encyclopedia of Simple Polish” available on the pzu.pl website. This allows anyone interested to use it at any time.
PZU employees use the „To proste!” app – a tool which supports their everyday activities. The Plain Language Department created this app with linguists from the University of Warsaw. It allows you to quickly and easily check any text in terms of plain language. Just paste in the content and the tool will indicate, for instance, whether sentences are too long or whether they contain difficult expressions.
The Plain Language Department employees rely on research tools. They use the Logios app, which allows for quantitative language research. They check the level of linguistic accessibility of texts with the PLI (Plain Language Index). With its help, they measure to what extent the verified texts approach the plain language standard. The PZU Plain Language Department assumed 40% of the PLI index as the standard.
The Plain Language Department simplifies texts in various areas, and their simple and understandable style is appreciated by experts. PZU is the only company to have as many as 5 „Certificates of Plain Polish Language” – this distinction is awarded by the Laboratory of Plain Polish Language at the University of Wroclaw. In 2022, PZU received this certificate for the language of documents in individual capital-protection insurance. The Laboratory of Plain Polish Language examined the content of general insurance terms and conditions, documents and letters, i.e. all the communication the client receives from entering into the agreement to its termination.
The certified texts meet the requirements of the international plain language standard. To determine this, texts undergo a rigorous quantitative and qualitative evaluation
These were not only PZU documents that were awarded certificates. Also, in 2022, employees of the Plain Language Department passed specialized exams and earned: „Certificate of a language consultant”, awarded by the Laboratory of Plain Polish Language at the University of Wroclaw, and the „Language Quality Mark” of the Polish Language Foundation at the University of Warsaw.
Best practices of PZU and PZU Życie
Language game – “How simple!”
PZU promotes plain Polish and uses various tools to do so. In 2022, the Plain Language Department prepared a social language game called „How Simple!”. Employees learned it at the annual Plain Language Conference. The game promotes clear and understandable language, teaches language correctness and surprises with interesting facts
The game’s 100 cards contain more than 1,000 words and phrases, more than 600 questions and more than 100 trivia questions, and above all – lots of fun. Players can test their knowledge in six categories: corpus, language news, simple language, grammar, spelling and linguistic trivia.
Plain language – subsidiaries
Since 2017, LINK4 has been changing its communication with clients to make it simple and easy to understand. The plain language project involves both simplifying documents addressed to clients as well as training and workshops for employees regarding the principles of plain writing. Starting from 2022, all general terms and conditions of motor insurance and housing insurance are written in plain language. A brief plain writing guide was prepared, i.e. a set of internally developed rules for writing in a manner that is accessible and understandable to every client. The Management Board Client Experience Team is responsible for the plain language project. LINK4 believes that insurance should be simple, and using clear and easy to understand language is a natural part of the process.
Bank Pekao strives to make its language of daily communication friendly and fully understandable for all clients. The main idea behind these measures is to reduce to a minimum the client’s time required to understand professional jargon. In 2022, the Bank:
- introduced new simplified model regulations and agreements. New simplified definitions of terms for representative services were implemented in communications with clients;
- appointed a special team of more than 40 plain language consultants to support employees on a daily basis in simplifying documents, letters, handouts and communications;
- trained 1,500 employees on the key principles of creating simple and correct texts;
- conducted dozens of information activities for all employees as part of its „Simply in Polish” program.
Moreover, representatives of Bank Pekao actively participate in the work of the working group on simple communication at the Polish Bank Association.
In 2022, Alior Bank continued its efforts in the area of simplifying communication. Internal regulations state that all employees who create communications for the client need to use plain language. The simplification team focused on internal education as part of which training sessions were held with internal trainers and an external linguist. This training also included further educational materials for bank employees. Meetings within the working group at the Polish Bank Association also continued. Alior Bank promoted plain language externally – in its social media. It implemented further simplified communications, which also included the first legal documents. The principles of plain language are written down in the „Simple Writing Manual,” which was made available to all bank employees. The Communication Simplification Project covers: agreements, regulations, SMS, letters, emails, AI messages (IVR, InfoNina), as well as responses to instructions.