The Colonial Mutual Life Assurance Society Limited, trading as CommInsure, has today pleaded guilty to 87 counts of offering to sell insurance products in the course of unlawful, unsolicited telephone calls, contrary to s992A(3) of the Corporations Act. This conduct is known as “hawking”.
CommInsure is, and was at the relevant time, a wholly owned subsidiary of the Commonwealth Bank of Australia (CBA).
Between October and December 2014, CommInsure, through its agent, telemarketing firm Aegon Insights Australia Pty Ltd (Aegon), unlawfully sold life insurance policies known as Simple Life over the phone (19-272MR).
CommInsure provided customer contact details to Aegon from CBA’s existing customer database. The CBA customers had not requested to be contacted for the sale of Simple Life by CommInsure, or persons on CommInsure’s behalf, or to receive marketing information from CommInsure.
In all of the 87 calls charged, CommInsure did not comply with the requirement to offer the customer the option of having the information required to be included in the Product Disclosure Statement (PDS) for Simple Life read to them prior to the offer to issue or sell the product.
In 14 of the calls charged, CommInsure also failed to meet the requirements to:
- give the customer a PDS before becoming bound to acquire Simple Life; and
- clearly inform the customer of the importance of using the information in the PDS when making a decision to acquire Simple Life.
This matter is being prosecuted by the Commonwealth Director of Public Prosecutions after an investigation and referral of a prosecution brief by ASIC.
CommInsure will be sentenced at a later time.
ASIC’s 2018 review of the sale of direct life insurance, found that outbound telephone sales of life insurance were ‘more commonly associated with poor sales conduct and increase[d] the risk of poor consumer outcomes’.
The Financial Services Royal Commission recommended that the hawking of superannuation and insurance products be banned (recommendations 3.4 and 4.1) and the Government has accepted those recommendations.
ASIC recently consulted on banning unsolicited telephone sales of direct life insurance and consumer credit insurance (CCI) (CP 317), following concerns identified in ASIC’s reviews of each of the sale of direct life insurance (REP 587), and CCI (REP 622). This will provide consumers with further protections now, ahead of the wider law reform being considered by Government. ASIC is considering the submissions received and has undertaken further targeted stakeholder consultation.
CommInsure is compensating customers affected by the mis-selling of life insurance (19-314MR). Some of the customers subject to these charges will be compensated in that program.