Insurer ClearView could face criminal charges over 303,000 breaches of anti-hawking provisions through sales of its insurance policies, the financial services royal commission has heard.
Under the law, financial institutions are barred from selling products via cold calls but ClearView did this consistently between 2014 and 2017, counsel assisting Rowena Orr QC told the commission in her summation of a fortnight of hearings on the insurance industry.
The company also mis-sold policies by using pressure tactics in ways that “meant policy-holders were frequently being sold policies in circumstances where ClearView was not behaving honestly or fairly.” Ms Orr said.
The tactics also “breached the prohibition on unconscionable conduct,” she said.
ClearView also failed to adequately train its staff so they could competently sell policies without breaching the law.
Its sales agents “were encouraged to sell aggressively, to sign up customers immediately, and to use other inappropriate methods of obtaining sales”, Ms Orr said.
Ms Orr also pointed out big problems in ClearView’s management practices.
“On the evidence, it’s open to find that the misconduct and the conduct that fell below community standards and expectations may be attributed to ClearView’s culture and governance practices, its risk management practices and its remuneration practices.”
Earlier, the commission had heard that ClearView distributed informal sales scripts to enable telemarketers to get around customer protection provisions in its formal scripts.
Ms Orr also named insurer Freedom as having “engaged in misconduct and conduct that fell below community standards and expectations in respect of its treatment of … vulnerable customers” by its own admission.
That behaviour continued after Freedom trained staff in dealing with vulnerable customers in early 2017.
The treatment of a man with Down syndrome who was sold insurance using pressure tactics over the phone despite the fact that his only income was a disability support pension.
The man’s father, Bruce Stewart, a Baptist minister, earlier told the commission that he only found out about the sale when a letter arrived for his son detailing the policy.
Mr Stewart and his son had difficult cancelling the policy and Ms Orr observed that chief operating officer Craig Orton had admitted that retention processes had been “too strong” and that Freedom had at times made it “too difficult” to cancel policies.
Earlier in the morning, the commission heard that general insurance industry is not classified as a financial service and is not banned from charging upfront commissions on policies.
The legislative carve-out also means that general insurers are not required to act fairly, efficiently and honestly and their contracts are not covered by unfair contracts legislation.
An industry code of practice in place since 2014 has recorded 31,000 breaches by insurers to date but no penalties have been levied, Insurance Council of Australia CEO Robert Whelan told the commission.