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Mis-sold life insurance policies
In 2018, the Czech Republic’s Financial Arbitrator’s Office invalidated an investment life insurance policy sold by AXA on the basis that it was concluded solely for saving and investment purposes, and the policies had no insurance component. The Financial Arbitrator concluded that the life insurance policies sold by AXA were more akin to conventional investment instruments, such as a mutual fund. Financial advisers were motivated to sell the product on a large scale due to the high commissions associated with the product. The Financial Arbitrator also found that the fees and costs associated with the contracts were insufficiently disclosed to investors, and fees were often very high. The Czech Financial Arbitrator instructed AXA to refund clients their premiums and pay a fine for the mis-sold policies. AXA will challenge the Czech Financial Arbitrator’s decision in court.
In a related case, the Financial Arbitrator cancelled the contracts from insurance company Česká Pojišťovna, after finding that the insurance firm did not disclose the cost structure of the insurance contract. The insurance firm is required to compensate affected consumers. However, Česká Pojišťovna does not agree with the decision of the Financial Arbitrator and will dispute it in an independent court.