Insurance group ClearView could have committed as many as 303,000 criminal offences with its high-pressure telesales tactics, the financial services royal commission has heard.
The group had internal training scripts that circumvented the law and were used to coach sales staff on how to get around the formal marketing scripts designed to comply with regulators demands.
ClearView chief risk officer Gregory Martin admitted to the commission that its cold calling tactics, which targeted poorer Australians, had breached the anti-hawking provisions in the corporations law by not providing clients with the correct stepped process to prove they wanted to take part.
“We didn’t understand that we were breaching the anti-hawking rules. We just got that wrong. We made a mistake,” Mr Martin said.
However after being played recordings of ClearView’s telesales he agreed with counsel assisting Rowena Orr QC that they amounted to “misleading and deceptive conduct, were deeply problematic and represented unconscionable conduct”.
“The word ‘appalling’ comes to mind,” he said. Anti-hawking breaches can involve criminal liability.
ClearView also circulated unofficial sales scripts that were designed to get around customer protections imbedded in formal scripts used to train staff.
Ms Orr described the scripts as “really three different ways of managing particular customer objections”. Mr Martin agreed.
One script was designed to get around the need for spousal approval.
“When you speak to your partner, you know him or her much better than me, but hand on your heart, will your partner object to this wonderful gift that you chose to give to them in the advent that you were not around to take care of them any more?”
“Can you please confirm you would like to proceed to purchase?” it said.
“Sales agents were being trained to engage in unfair sales practices,” Ms Orr commented. Mr Martin agreed.
That the pressure tactics were applied to largely lower-income people became a point of a somewhat semantic discussion.
“It was poorer people that were being targeted?” Ms Orr asked.
“I emphasise it was poorer, not poorest. You can’t build a business on that,” Mr Martin replied.
“It was not meant to go down to the lowest or particularly low (socio-economic level) … but that’s where it was finding itself.”
“I would say poor. You would say poorer people,” Ms Orr responded.
From the company’s viewpoint Mr Martin said the strategy was unsuccessful. “We didn’t even make money by doing this stuff,” he said.
Another recording played to the commission captured the sale of life insurance over the phone to a disability pensioner with six children, four who lived with him, and a “missus”.
Through the interview it became apparent that the man was barely literate and he wanted to run the proposal by “the boss” [his wife]. The sales agent, after playing on his concerns about the need to support his family if something happened to him, then told the man that he could agree to the policy without entering into a legal contract.
The agent went on to sign him up to what was a legal contract without consulting his wife.
The commission also heard that ClearView had a target rate of four per cent of its sales calls involving a breach of legal requirements. However a review by the company found that at one point 25.8 per cent of calls were not compliant.
Mr Martin described the telesales tactics as “very serious. I struggle with the whole culture around this,” he said.