Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 1. Unfair Commercial Practices Directive, Chapter 2, Section 1, Article 7, 4., (a)

The practice of an insurance company to provide to its potential clients an indicative interest rate on a suggested investment product, is not a misleading commercial practice in the event the indicative nature of this interest rate is clearly mentioned in the accompanying documentation.

The defendant, an insurance company, issued and offered to its potential clients a printed version of the insurance offer, in which it was stipulated that those who would be insured with the company would also be entitled to a bonus subject to the profit generated by an out performance investment product with indicative total return of 6%.

This insurance program was called “MONEY FOR YOU”.

The offer also included an indicative table of the selling value of those investment products with an indicative total return of 6%. A consumer claimed that this practice of the defendant was misleading and unfair because it gave the impression to a potential customer that the provisioned indicative return corresponded to the average anticipated real return of the investment, without any reference to the actual total returns from this investment product during the last years or to the financial indexes from which the rate of the return depends. According to the consumer this could result in the material distortion of the financial behaviour of the average consumer.

However, in the last page of the printed form under the title “USEFUL INFORMATION FOR THE PENSION PROGRAM” it was mentioned that the ratio of the investment return included in the aforementioned table was indicative and that it had been calculated “supposing that the indicative total investments return of the suggested investment product is 6% each year”. Moreover it was added that practically the investment return “changes from year to year and that the profit generated from the suggested investment product each year will be calculated based on the real investments return of this product for the specific year and not on the indicative one”.

he court of first instance (Athens Court of first instance), asked by the plaintiff to judge on these facts, ruled that it is obvious from the printed version of the insurance contract under dispute, that the defendant clearly communicated to its future clients a) that the potential benefits from the proposed out performance investment product are not guaranteed, b) that the return on the investment changes from year to year, c) that the return of 6% mentioned in the contract is indicative and d) that the use of the phrase “indicative return 6%” cannot mislead the average consumer. Therefore the claim was dismissed as unfounded. The plaintiff appealed against this decision.

Is the practice of an insurance company to provide to its potential clients an indicative interest rate on a suggested investment product, a misleading commercial practice in the event the indicative nature of this interest rate is clearly mentioned in the accompanying documentation?

The court held that it is clearly indicated in the written documentation of the insurance policy concerned, that the defendant does not guarantee its future clients any potential benefits from the proposed out performance investment product and that the return on the investment may change from year to year.

In addition, the court held, the return of 6% mentioned in the policy is indicative only and the use of the phrase “indicative return 6%” cannot mislead the average consumer.

As a result, the consumer was clearly informed in the indicative nature of the calculation, hence the commercial practice does not constitute a misleading practice.

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The court in appeal ruled against the plaintiff, hence the plaintiff's claim was dismissed in both instances.