Investors complain to Polish regulator over structured

Investors complain to Polish regulator
over structured products losses
24 Mar 2015
Lengiewicz Wrońska Berezowska i Wspólnicy
(LBW) has submitted a complaint to the Komisja
Nadzoru Finansowego (KNF), the Polish
regulator requesting control of the activity and
assets of TU Europa and TU Open Life and the
appointment of a temporary board replacing
the one that caused the damage to the policy
holders, according to Anna Lengiewicz,
managing partner at LBW.
The law firm is acting on behalf of the Municipal
Commission for Consumer Protection (MCCP) in
Warsaw and filed 357 applications on behalf of
these clients requesting an inspection of the
two companies.
The request was submitted on behalf of
investor in unit-linked life insurance products
launched by TU na Życie Europa and TU Open
Life Życie, with the application listed on a
dedicated website. The KNF has yet to reply.
“The basis for claims is that consumers were
buying life insurance products, which in fact
were structured products based on indexes
with unknown structures and composition;
the contracts were unclear and misleading;
and consumers were not informed about the
risk connected to those products,” said
Lengiewicz.
The products were linked to the following
indices - from Nomura: Growth Poland, Growth
Poland 2, Growth Poland 3, GoBrazil, GoChina,
GoPoland; from Royal Bank of Scotland: VC
Aquantum Pegasus Zeus, VC Commodity
Autopilot ER 10%, Volatility Controlled
Emerging Opportunities Strategy 2; and, from
BNP Paribas: Libra Emerging Markets, New
Frontier 8, Millenium Commodities IsoVol6,
Africa RC 10, Agriculture RC 11, Bric RC 10,
Energy RC 11, Industrial Metals RC 11, Poland
RC 20, and Precious Metals RC 11.
These investors are also part of a class action
filed by 895 suing for the return of money lost
on structured products. The lawsuit was
initiated at the end of last year. “We have asked
the court to pass a sentence stating that the
contracts with these consumers are invalid and
order the repayment of all client money,” said
Lengiewicz.
Those buying unit-linked policies issued by TU
Open Life between 2011 and June 2014
invested PLN2.405bn (€580m), while the
current value of these assets is PLN1.408bn: the
products are derivative-based policies Plan
Regularnego Oszczędzania Zabezpiecz
Przyszłość, Plan Oszczędnościowy Stabilne
SRP a division of Euromoney Global Limited
8 Bouverie Street, London EC4Y 8AX | Tel: +44 (0) 20 7779 8002 | Fax: +44 (0) 20 7779 8040
Email: [email protected] | Web: www.StructuredRetailProducts.com
Company Registration No: 00142215 | UK VAT Reg no: GB 243 3157 84
Oszczędzanie, Symfonia Zysków,
Dziesięciokrotka, Genesis,Plan Regularnego
Oszczędzania Gemini, Kwartalny Profit,
Światowe Bogactwa, Światowe Rynki, Kwartalny
Profit Plus, and non-derivative based funds
Better Future, Plan Inwestycyjny Skuteczne
Oszczędzanie, Plan Inwestycyjny Lepsze Jutro,
according to LBW.
The credit risk of the products is linked to Getin
Noble Bank, while the derivative counterparties
hedging for the TU Open Life products were
Nomura and RBS. The products launched by TU
Europa are linked to strategy indices launched
by BNP Paribas, Nomura and RBS and hedged by
the same parties.
In most cases, the distributor was Getin Noble
Bank (now part of LC Corp) or entities within its
group. Getin Holdings was the main shareholder
of the insurance companies and Getin Noble
Bank when the structured products were
launched.
TU Europa belonged to Getin Holding until
2011, when it was acquired by Germany’s
Talanx and Japan’s Meiji Yasuda.
TU Open Life is part of the Open Finance Group.
Getin Holding, Getin Noble Bank, LC Corp and
Open Finance are now listed on the Warsaw
Stock Exchange.
The value of funds launched by TU Europa fell
by 38% between 2009 and June 2014: investors
had originally placed PLN1.949bn in TU Europa’s
products, although the current value is
PLN1.199bn.
All the TU Europa products are derivativesbased, fund-linked policies: Libra I, Libra
II, Libra III, Pareto, Pareto II, Plan
Oszczędnościowy Bezpieczna Przyszłość, Plan
Oszczędnościowy Bezpieczne Oszczędzanie,
Stabilny Plan Oszczędnościowy,Pareto
Millennium, Pareto Millennium II, Kwartalne
Zyski, Nature Premium, Enterprise.
The investors paid TU Europe
PLN1,643,476,983.64, which was worth
PLN1,046,872,260.59 on June 30, 2014, while
TU Open Life’s investors paid
PLN2,405,727,542.06, which was worth
PLN1,424,297,190.08 on June 30, according to
Lengiewicz. “That means that by June 30, TU
Europa and TU Open Life had lost PLN
1,578,035,075.03 of their clients’ money,”
according to Lengiewicz. The valuations were
based on financial reports produced by the
insurance companies.
The lowest value was registered for the Libra
Emerging Markets II 1 products (coded
2011_ULIB3_01_v01), which were linked to
the structured unit-linked fund Europa Fund
LIBIII/2011/01, whose initial unit value was
PLN200, but fell by June 2014 over 57% to
PLN87.32, says a memo from the law firm.
Getin Noble Bank (now part of LC Corp) stopped
offering long-term (10 years) structured life
insurance policies that require investment in
instalments but continues to offer short-term (4
years) structured products which required a
lump sump investment.
SRP a division of Euromoney Global Limited
8 Bouverie Street, London EC4Y 8AX | Tel: +44 (0) 20 7779 8002 | Fax: +44 (0) 20 7779 8040
Email: [email protected] | Web: www.StructuredRetailProducts.com
Company Registration No: 00142215 | UK VAT Reg no: GB 243 3157 84