The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is conducting its sixth round of hearings, focused on insurance, in Melbourne. Follow the proceedings with us live from 9am each day.
Here’s what we learned on the second day of insurance hearings.
Independent life insurer ClearView conceded it “never prioritised compliance” after the royal commission heard details of a series of incentive programs, including one that read “let it rain with gift cards” for call centre staff in a company that broke anti-hawking laws hundreds of thousands of times.
Counsel assisting Rowena Orr asked ClearView’s Gregory Martin a question that put the entire industry into sharp focus, wondering if it is “possible to sell life insurance in outbound sales calls in a way that is both financially viable and legally compliant?”. “I find it difficult to understand how you can reconcile those things,” Mr Martin said in response.
Grant Stewart’s adult son who has Down’s Syndrome was sold an accidental death policy he did not understand or need by Freedom Insurance, and Mr Stewart faced delays in trying to have the policy cancelled.
Incredibly, the agent who sold the policy to Mr Stewart’s son had already received warnings from Freedom over his conduct but was not sacked and was indeed encouraged to sell harder.
Freedom offered commissions to sales agents and non-cash benefits such as a trip to Bali or a Vespa, which Freedom COO Craig Orton agreed encouraged conflicted behaviour by sales agents.
Freedom has written to ASIC to report a range of breaches of the corporations law. The letter acknowledges Freedom sales agents’ behaviour constitutes a potential breach of the Corporation Act’s section 912A(1)(a), 912A(1) (ca) or 912A(1)(f). That is, for providing services efficiently honestly and fairly, ensuring representatives comply with financial services laws, and to ensure representatives are adequately trained and competent to provide financial services. Freedom told the commission at 3pm yesterday it had decided to stop selling four products through outbound sales, although the company did not make a concurrent ASX announcement.
Freedom’s Mr Orton will return to the stand at 9.45am tomorrow. Thanks for following the hearings with us today. We’ll be back from 9am tomorrow.
11 September 2018