2019 Financial
and Social Report

Ethical standards in client service

[GRI 103-1, GRI 103-2, GRI 103-3, FS15] Ethical sales activities place a strong emphasis on the compliance of service with the applicable regulatory requirements and meet the following assumptions:

  • the tools and guidelines in client call scripts are aimed at ensuring the best quality of client service by providing full and precise information on the individual products and processes;
  • client call scripts address the need to examine client needs and propose products adequate to client’s expectations and situation;
  • assumptions and tools pertaining to product models are reviewed by the Compliance Department.

The guidelines of the Book of Client Service Standards obligate employees to do the follow in particular: analyze client needs, clearly present the Bank’s offer, discuss the rules on how the product operates, present cost-related information, diagnose client doubts, provide explanatory information and finally – confirm that the rules on the product’s operation are intelligible to the client prior to signing an agreement.

At the Bank Millennium Group, ethical sale of products is regulated not only in such guidelines as the Code of Ethics, Book of Standards or legal regulations. Attaching great importance to the quality and a high level of ethical sales, the Bank also drafted Client Call Scripts about daily banking products, credit products and saving and investment solutions. These scripts have been in operation for several years and are gradually being updated and optimized. Each implementation of a new script involves mass implementation of the solution among direct customer service employees and training. All modifications to call scripts focus on providing clients with thoroughly transparent information and education to ensure that they are fully aware of the Bank services they utilize.

Observance of Client Call Scripts and Client Service Standards is monitored continuously and the results are delivered to the Bank’s management board and the direct superiors of the assessed employees, and are also used to take remedial actions at the level of the Bank as a whole. The monitoring of compliance with sales standards and ethics is also conducted independently of the Bank by various types of service quality rankings, to which the Bank attaches great importance and takes into account all the conclusions resulting from them.

Separate ethical sales regulations are in force in the companies. Millennium Dom Maklerski has implemented a number of documents governing the rules for showing due diligence in client contacts. The most important ones are the rules and regulations for providing brokerage services, contracts executed with clients and the “Policy of executing orders and acting in accordance with the best interest of the Client at Millennium Dom Maklerski SA”.

[GRI 102-11, GRI 102-15, GRI 102-30] Before offering a product, the Bank checks client needs to ascertain his/her knowledge about credit products and financial standing, whereby it is possible to tweak the manner of communication and align the product to his/her circumstances. The risk of over-indebtedness and household budget mismanagement is minimized owing to advanced methods of assessing clients’ creditworthiness and capabilities used by the Bank. These methods make it possible to identify situations in which a client should not take out any more debt. The Bank offers its clients the opportunity to consolidate unsecured debt being repaid to other lenders, which often allows them to reduce their monthly credit charges in their household budgets and improve their financial security. Clients using online transaction banking may take advantage of advanced tools for managing expenses enabling them to deepen their knowledge on how to manage their budget effectively.

Bank Millennium offers a consolidation loan to clients who have difficulty servicing their debt with the option to amortize their debt in other banks. In addition, clients may take advantage of a deferred payment of one installment of a cash or consolidation loan, which is very helpful for those who must use the funds for an installment payment in a given month for other purposes.

If a loan is not repaid, the Bank first seeks to reach an amicable settlement, offering clients an opportunity to enter into restructuring agreements.

Debt restructuring applied by the Bank in the process of pursuing receivables involves the execution of an annex to the original agreement or a separate restructuring agreement whose content modifies the binding debt repayment terms binding for the client, as appropriate to the client’s standing and financial capabilities. Such modifications may include: reduction of the monthly repayment amount (temporary or for the entire repayment term), suspension of the payment of an installment in whole or in part, extension of the loan term, reduction of the interest rate, change of the installment payment date, change in the settlement sequence of the amounts to be repaid, change of the collateral or change of the installment amount. In 2019, approximately 2.6% of the clients in the process of recovery of retail receivables benefited from these solutions.

Mortgage loans indexed to or denominated in foreign currencies, in majority in Swiss francs, were offered to clients in years 2000, most of them were granted in 2005-2008. At the time of their granting, the loan agreements were in accordance with Polish law and applicable regulations, in particular with recommendations from KNF (in particular, Recommendation S). At the time of taking the loans in foreign currencies, clients had first to expressly reject the loan in Polish zloty. Polish Banking Association (ZBP), at proper moment in time, suggested abandoning currency mortgages, but supervision and the public sphere encouraged them, which was described and documented in the ZBP study entitled „White book of franc loans in Poland”. The reasons for this were significant. In Poland there was a lack of capital and significant demand for mortgage loans and the relatively high interest rate of the zloty was an obstacle to support finance the housing expansion carried out at that time. Foreign currency mortgages, supported by lower interest rates in Swiss francs and in euros, had a positive impact on Poland’s economic growth and contributed to the creation of approx. 775,000 flats and houses.

Credit agreements were not questioned in the period when the Swiss franc to PLN exchange rate was favorable for borrowers. The borrower’s questioning of contract provisions began when the exchange rate began to change to the detriment of customers. Clauses referring to exchange rate tables of some banks have been included in the list of abusive clauses as a consequence of abstract abusiveness control procedure. It is worth emphasizing that said inclusion does not necessarily mean unlawfulness in particular case. It should also be stressed that in economic terms there was not any difference between a loan indexed to a foreign currency and a loan denominated in a foreign currency. In fact, loans indexed to foreign currencies (which was in fact Bank Millennium main offer) were offered for the convenience of borrowers that wanted to be sure that at the moment of taking the loan they would have the exact amount in zlotys that they required.

The turn in dissatisfaction of borrowers was caused by the Swiss central bank, which unexpectedly removed the floor on its currency on 15 January 2015, as a result of which the Swiss franc appreciated significantly against other currencies including the Polish zloty. In this way, the decision taken had impact far beyond the borders of Poland and also hit Polish citizens who took out housing loans in this currency.

Since January 2015, when the rapid increase of the Swiss franc exchange rate was recorded, the Bank has been offering special measures known in banking sector as the “six-pack”. According to the ZBP, the average annual cost of the program for the banking sector is estimated at about PLN 1 billion. The package includes the following solutions:

  1. Accepting a negative LIBOR rate for calculating the interest rate for mortgage loans.
  2. A significant reduction in the FX spread leading to a perceptible decrease in the loan instalments paid by clients.
  3. At a client’s request, extension of the repayment term or temporary suspension of loan instalment repayment so that the instalment amount is not higher or just slightly higher than before freeing the exchange rate. These requests may be made only by borrowers residing in the property for which the loan was taken.
  4. Desisting from the demand for borrowers to furnish new collateral and loan insurance if they pay their loan instalments on a timely basis.
  5. Providing the borrowers with the opportunity to replace the loan currency from CHF to PLN at the exchange rate equal to the average exchange rate published by the NBP.
  6. Making the rules for mortgage loan restructuring more flexible for clients residing in properties subject to loans.

Bank Millennium customers, both Swiss franc and Polish zloty borrowers, who are in difficult life situations can apply for support from PLN 600 million Fund created by banks, including Bank Millennium, in 2015. Under the Act on Supporting Distressed Borrowers Who Have Taken Out a Mortgage Loan, adopted in 2019 and coming into life on 1.1.2020 application criteria has been amended what is expected to increase the availability of the Fund. Since its creation the Fund has been used only in a few percent and is still awaiting full allocation to borrowers in need.

The support is temporary aid granted to the borrowers who are in a difficult life situation, such as loss of a job or reduced income. Supported borrowers receive a monthly amount designated for the repayment of a loan installment. The funds are paid out for no more than 36 months, in the amount equal to the loan installment, but no more than PLN 2,000. The repayment of funds begins two years after the last support payment is disbursed and is distributed into 144 interest-free installments. Part of the funds may be written off subject to regular repayment.

The Bank undertakes number of actions at different levels towards different stakeholders in order to mitigate legal and litigation risk of FX mortgage loans portfolio:

  • Mitigation of future court claims – the Bank is open to negotiate case by case favourable conditions for early repayment (partial or total) or conversion of loans to Polish zloty.
  • Defence of cases in court – the Bank will continue to take all possible actions to protect its interests in courts while at the same time being open to find settlement with customers in the court under reasonable conditions.
  • Constructive approach and cooperation with authorities e.g. UOKiK (Consumer Protection), Financial Ombudsman and KNF (Financial Supervision)

The Bank is in constant contact with clients with foreign currency loans and has prepared many solutions to support borrowers in repayment of the mortgage.

The Bank proposes special terms and conditions allowing clients to convert the loan currency or repay the loan partially or in full. Negotiations of exchange rate terms and loan parameters after currency conversion or partial repayment were continued and the client’s situation and expectations were taken into account on a case-by-case basis. In 2019 ca. 900 customers accepted Bank’s offer.

Aggressive marketing campaigns conducted by law firms result in an increase in the number of court cases. Based on ZBP data gathered from 11 banks having FX mortgage loans, over 70% of disputes were finally resolved in favor of banks during whole 2019 year. However, after the Court of Justice of the European Union (CJEU) judgment issued on 3 October 2019 (Case C-260/18) there is a risk, that so far mostly positive for banks line of verdict in courts may change. More information can be found in 2019 Bank Millennium Group Annual Report.

As at the end of 2019, the Bank had 2,010 loan agreements under individual litigations concerning indexation clauses of FX mortgage loans submitted to the courts with the total value of claims filed by the plaintiffs amounting to PLN 203 million. Until 31.12.2019 only 19 cases were finally resolved and the vast majority of such judgment were in accordance with the Bank’s interest.


[GRI 206-1] In addition, the Bank is a party to the group proceedings (class action) subject matter of which is to determine the Bank’s liability towards the group members based on unjust enrichment (undue benefit) ground in connection with the foreign currency mortgage loans concluded. It is not a payment dispute. The judgment in these proceedings will not grant any amounts to the group members. The number of credit agreements covered by these proceedings is 3,281. The case is still before its first hearing, which is scheduled for March 2020. Second class action suits related to the insurance for the low down payment is pending against Bank Millennium. This case is undergoing examination and no judgment related thereto has been pronounced.

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