In terms of the products offered, PKO Bank Polski S.A. and the PKO Bank Polski S.A. Group pursue a policy which is to ensure: compliance of the products with the applicable regulations and their correct labelling. The scope of this policy at the Bank and in the Bank’s Group encompasses the stage of formulating a product offer, the presentation of the product to the customer, the purchase (i.e. signing the agreement) and the stage of the product being used by the customer. The principles and mechanisms of pursuing the compliance policy and appropriate labelling of products apply to the Bank and the entire Bank’s Group.
- GRI:
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2-27
The Bank and the Bank’s Group make every effort to ensure that the products offered meet the requirements set out in the legal regulations and the accepted market standards. These efforts are focused on ensuring that:
- the products offered are adequate to the needs of the customers to whom they are addressed,
- the manner and proposed form of the purchase of products are adequate to their nature,
- before concluding the agreement, customers are provided with reliable, transparent and comprehensive information about the product, in particular its nature, design, conditions, benefits and risks, as well as fees, commissions and other costs related to the conclusion, performance and potential early termination of the agreement (in a manner comprehensible to an average person)..
These principles apply to all entities of the Bank’s Group, as well as the enterprises which the Bank has entrusted with the performance of specific operations related to the sale and/or handling of products.
- GRI:
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417-1
As part of ensuring compliance of the products with the regulations, the Bank manages the misselling risk at the stage of product development and launch, and then at the stage of offering the product to customers. Each product undergoes a pre-implementation analysis with regard to the risks it generates and the identification of target customer groups. The Bank also identifies the groups of customers to which the Bank should not offer the purchase of a given product because of its inadequacy to their needs or for other reasons (the so-called anti-groups). Employees of the Bank may not recommend or offer the purchase of financial instruments that are assessed as incompatible with the customer’s objectives or needs. The misselling risk is also mitigated at the stage of commencing the sales activity – before offering the purchase of a specific product to a customer, it is assessed whether a given product is adequate to the needs of this type of customer. It aims eliminate the cases, for example, of selling unemployment insurance to pensioners and/or long-term investment products to elderly persons. Additionally, the Bank always provides reliable and exhaustive information to customers about the products offered so that they can make an informed choice. The Bank informs customers about both benefits and risks arising from the purchase of the individual products.
The Bank applies solutions to bar customers from instruments that do not comply with their sustainable development preferences by, among other things, analysing customers’ needs and paying particular attention to the content of the advertising messages formulated to inform them of the environmental aspects of the products offered (see 13.7.5B).
The Bank considers any irregularities reported by the Bank’s customers (in particular complaints) within the deadlines arising from the legal regulations. Depending on the findings, the Bank takes steps to eliminate such irregularities, prevent their future occurrence and improve the quality of service (for more information, see chapter 13.7.5A).
Similar solutions concerning misselling risk management, in keeping with the principle of proportionality, are also in place in the other entities of the Bank’s Group which develop and/or sell financial products.
The Bank’s Group, including the Bank, fulfils the requirements concerning appropriate labelling of banking and investment products by providing the customers with all the necessary information about them, especially at the pre-contract stage.
The scope of information provided about the products is specified in the applicable legal regulations and the recommendations of the PFSA. The general rule is that the highest level of protection is available to retail customers – consumers. This information is formulated in such a way that it is comprehensible to the so-called “average consumer” within the meaning of the Act on counteracting unfair market practices, i.e. a consumer who is sufficiently well-informed, attentive and cautious, whereas the scope of the information provided to financial institutions and other professional buyers of financial products and services is narrower.
The appropriate product labelling also applies to the Bank’s advertising messages, which support its sales activities and shape its brand image. All marketing materials published by the Bank take into account the specific obligations arising from the legal regulations (e.g. the Consumer Credit Act – as regards the advertising of such loans) as well as market standards and the PFSA guidance formulated in the adopted “Principles of advertising banking services”.
Compliance with the law and regulations
- GRI:
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2-27
Supply chain
The Bank follows the principles of social responsibility in the supply chain by managing its relationships with external entities in the following manner:
- optimising the level of competition in the procurement procedure,
- fair treatment of bidders and suppliers,
- ensuring the confidentiality of the proceedings,
- ensuring that the requirements and criteria established in the procedure are proportionate to the goods or services purchased,
- managing conflicts of interest,
- taking measures to prevent corruption and ensure the integrity and transparency of procurement processes,
- requiring suppliers to adhere to the principles of social and environmental responsibility.
Operational risk related to outsourcing banking activities to external entities
The Bank conducts banking activities with the support of external entities. As a result, it is exposed to operational risk arising from outsourcing services to them.
Principles for operational risk management, Principles for outsourcing the activities of PKO Bank Polski S.A. to external entities other than agents and/or intermediaries (outsourcing), Principles for cooperation with agents, and Principles for cooperation with intermediaries and Internet intermediaries.
Risk management is performed at all stages of outsourcing activities to external entities:
- before selecting an entity: assessment of the risks related to outsourcing activities, including the assessment of the critical nature of the activities planned to be outsourced,
- selection of the entity: assessment of the entity’s activities, its reliability, technical and organisational measures and standards for the protection of personal data, assurance of ethical principles and standards, assessment of the entity’s financial position and ability to ensure continuity in the performance of the activities entrusted, identification and assessment of the existence of conflicts of interest,
- concluding an outsourcing contract: including contractual provisions in contracts with contractors which secure the interests of the Bank and its customers (including securing data containing protected information, possibility of effective oversight of outsourcing contracts by the competent supervisory authorities and other required provisions), maintaining and ongoing updating of the records of contracts concluded and the entities which perform them,
- monitoring of cooperation: supervising the performance of contracts, regular review of contingency plans, regular risk assessment, including the critical nature of the activities outsourced, reporting irregularities in the performance of contracts, monitoring KRIs providing information about the scale of breaches in cooperation with external entities, other than agents and intermediaries, bi-annual review of the cooperation with external entities performing outsourcing contracts and presenting the results to the relevant bodies.
The procedures for managing operational risk, including the outsourcing risk at PKO Bank Hipoteczny S.A., correspond to the standards applied at the Bank; at KREDOBANK S.A., they correspond to the requirements of the National Bank of Ukraine, which are based on the EBA/GL/2019/02 Outsourcing Guidelines of 25 February 2019.
Cooperation with suppliers of goods and services related to the ongoing procurement of the entities of the Bank’s Group
- GRI:
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414-1
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414-2
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407-1
Efficient and responsible purchasing processes guarantee the smooth operation of each company. To meet expectations concerning this area, in Q4 2022 the Bank established a Procurement Division, bringing together units responsible for both the execution of purchasing processes and the verification of suppliers, as well as implementation and development of a new purchasing application. The task of the Bank’s Procurement Division is to oversee the procurement process in order to ensure the timely supply of the required goods and services of an appropriate quality. In addition to the Bank’s interest in the broad sense, the Procurement Division oversees compliance of the procurement processes with the principles of ethics, including the principle of equal treatment of all participants. When selecting suppliers, the Bank also takes into account certain criteria other than price, and the compliance with business ethics and strives for transparent relationships with suppliers.
The Procurement Policy of October 2023 has been developed based on market best practice, taking into account the findings of internal audits. The Bank is bound by the regulations on the purchase of goods for services, laying down principles and methods of purchases which are updated on an ongoing basis, in accordance with the changing regulatory environment. The main regulatory provisions in addition to the Policy are the “Principles for purchasing goods and services”, “Procedures for purchasing goods and services at the Bank”, “Supplier or Bidder Code of Ethics”. In 2024, it is planned to repeal the existing Principles and Procedures and adopt new internal legislation in their place to regulate the procurement process by taking into account the latest trends and regulatory requirements. In accordance with para. 12(3) of the Procurement Policy, measures have been taken to develop uniform standards for the procurement policy in the Bank’s Group companies.
Since the second quarter of 2022, the RFP is accompanied by the Supplier or Bidder Code of Ethics, and the Supplier, in wishing to submit an offer, is obliged to accept its provisions.
The Code of Ethics has been communicated to the Bank’s Group companies with a request to implement it in their ongoing procurement procedures. The process of implementing the companies’ revised procurement regulations, including the Code of Ethics, was completed in July 2023.
In 2023, an ESG Questionnaire has been adopted, in which a bidder aiming to provide services or offer supplies to the Bank is required to answer a series of questions that may affect the evaluation of bids in the procurement process (see section on ESG). The ESG questionnaire is attached to the RFP.
Relationships with suppliers are built on the basis of honesty, transparency of action, mutual respect and professionalism, including, in particular, through:
- honouring the accepted arrangements and obligations,
- making payments and settling other liabilities in a timely manner and in accordance with the contractual terms,
- resolving difficult situations and conflicts through dialogue,
- verifying suppliers solely on the basis of merit and business considerations, observing the ESG criteria,
- informing suppliers about the standards of conduct,
- efficient communication with suppliers at every stage of the procurement process.
In 2023, in carrying out the procurement process the Bank analysed the situations which could cause a potential conflict of interests. All employees of the Bank participating in the purchasing procedure confirm the absence of a conflict of interest. In the event of a conflict of interest, the Bank’s employee is obliged to submit a statement in accordance with the Bank’s internal regulations, however, a conflict of interest should be reported immediately after its occurrence, at each stage of the purchasing procedure. In particular, a model declaration of conflict of interest is attached to the RFP. The suppliers are obliged to disclose all situations/relationships which cause or could cause a conflict of interests in the future, with the bid. If such circumstances arise, at each stage of the procurement process, among others, after the bid has been submitted, at the stage of signing the contract or afterwards, the affected bidder or supplier is obliged to submit a declaration on this matter immediately.
The Bank and other entities of the Bank’s Group approach the issue of settling their liabilities to suppliers in a timely manner with due care and diligence. In 2023, the value of invoices paid late, on which interest was charged as a result, constituted a marginal percentage of all the invoices paid.
Share of the value of invoices on which interest was paid in the total value of invoices paid
| Bank | Group | |||||||||
| 2023 | 2022 | 2021 | 2020 | 2019 | 2023 | 2022 | 2021 | 2020 | 2019 | |
| Share in total value of invoices (%) | 0.031 | 0.088 | 0.003 | 0.009 | 0.001 | 0.014 | 0.043 | 0.022 | 0.017 | 0.024 |
In 2023, the Bank has made the use of ESG criteria mandatory in all procurement procedures conducted by tender.
As part of the environmental area, the bidder is assessed, among other things, as to whether:
- it takes action to reduce the amount of waste produced, applies the rules for separating waste, disposes of hazardous waste in an appropriate manner,
- it makes rational use of electricity and heat, favours the use of „green” energy, takes measures to reduce water consumption and counteracts water pollution,
- it minimises emissions of greenhouse gases, exhaust fumes and dust to an extent appropriate to its operations, and in particular manages its car fleet in a rational manner, choosing vehicles with lower capacity and fuel consumption and, where possible, equipped with environmentally friendly propulsion systems.
As part of the social area, the bidder is assessed, among other things, as to whether:
- it ensures that human rights are respected in its activities, does not employ children and complies with the applicable legislation on child labour,
- it applies legislation on workers’ rights, including health and safety at work, ensures proper working conditions for its employees,
- it ensures equal treatment, in particular of employees and contractors, does not engage in any discriminatory practices, in particular on the grounds of age, gender, disability, religion or racial affiliation.
As part of the corporate governance area, the bidder is assessed, among other things, as to whether:
- it bases its activities on fair and free competition as well as reliability and credibility in communication,
- it protects and does not disclose confidential information obtained in the course of cooperation, complies with security regulations for all information processed,
- it takes care to select counterparties that meet ESG requirements
Evaluation criteria relating to ESG are mandatory evaluation criteria for tenders.
The Bank holds the Procurement Excellence certificate issued by CIPS (Chartered Institute of Procurement and Supply), the largest procurement organization in the world. The recertification process began in 2023.
[GRI 414-1] In 2023, the Bank applied ESG criteria in all tender procedures.
[GRI 414-2] In 2023, the Bank did not record any negative social effects in the supply chain
[GRI 407-1] No operations or suppliers characterized by a high risk of restricting the freedom of association and collective agreements were identified at the Bank in 2023.