• Consumer, beware of the so-called investment mortgage notes.
• When the note issuer declares bankruptcy, you may not get your money back.
• This is a new way to raise capital which as a mechanism is risky for consumers.

The Office of Competition and Consumer Protection warns of the risk associated with investment in the so-called interest-bearing investment notes. According to the information gathered by UOKiK, the consumer transfers money to the note issuer. The issuer uses this money to provide entrepreneurs with loans secured on real estate. According to UOKiK, this may be a new way to raise capital from consumers and an attempt to circumvent the regulations on issuing corporate bonds. Since November 2018, securities must be registered with the National Depository of Securities. This obligation does not apply to promissory notes. The Authority is taking a closer look at investment notes, and if there are relevant premises, explanatory proceedings may be initiated.

“After problems with corporate bonds, when their offering and trading became regulated by law, entrepreneurs have created an alternative way of raising capital. All investing is subject to risk - it is important for the Authority that consumers have reliable information about its level, enabling them to make the right decision. I urge consumers to be cautious about proposals to invest in promissory notes. A promissory note is not subject to the Act on public offering or the Act on trading in financial instruments. This means that funds - often resulting from many years of abnegation, hard work and saving money - are not properly protected,” says Tomasz Chróstny, President of UOKiK.

“Offering this type of high-risk products and transferring funds to other entities raises our serious doubts. Therefore, out of concern for consumers, I warn against investing in the so-called investment mortgage notes” - adds the President of the Authority.

Investment note - threats

• In the regulations, there is no such term as “investment note”. It was invented by entrepreneurs to describe another product enabling them to raise capital. The term “promissory note” is found in the law on promissory notes. A person or company that signs a promissory note must give back the sum of money borrowed plus interest, if the interest is stipulated for in the note.
• The purpose of an ordinary “promissory note” is to additionally secure the debt. The “investment notes” raise doubts as issuers use them to obtain money to provide loans.
• Regulations and requirements regarding public issue of securities do not apply to promissory notes; for example, the issuer does not have to present a securities note or to describe the terms and conditions for issue of notes. This may mean the consumer will not have reliable information about the value of collateral for such note, its issuer, associated risk, and the undertaking for which they entrusts their funds to the note issuer.
• In the event the note issuer goes bankrupt, consumers may not get their money back. Such investments are not covered by the Bank Guarantee Fund guarantee.
• Risky investment. The offers wrongly inform about the guaranteed rate of return and security of promissory notes, whereas every investment is subject to risk.

Consumer support:

Phone: +48 801 440 220 or +48 22 290 89 16 – consumer helpline
e-mail: [SCODE]cG9yYWR5QGRsYWtvbnN1bWVudG93LnBs[ECODE]
Consumer ombudsmen – in your town or district
Regional Consumer Centres: Phone: +48 22 299 60 90 – Dlakonsumenta.pl
Office of Electronic Communications - Consumer Information Centre - +48 22 330 4000

Additional information for the media:

UOKiK Press Office
Pl. Powstańców Warszawy 1, 00-950 Warszawa, Poland
Phone +48 695 902 088, +48 22 55 60 246
E-mail: [SCODE]Yml1cm9wcmFzb3dlQHVva2lrLmdvdi5wbA==[ECODE]
Twitter: @UOKiKgovPL