Royal commission latest: Man with Down syndrome pressured into insurance

THE finance royal commission has been played a harrowing recording of an intellectually disabled man badgered into buying injury and death insurance he didn’t need or understand.

THE finance royal commission has heard a harrowing recording of an intellectually disabled man badgered into buying injury and life insurance he didn’t need or understand.

The man’s father said he was flummoxed when he found out a high-pressure call centre run by Freedom Insurance sold his intellectually disabled son insurance and obtained his bank details.

The man’s father, Doncaster-based Baptist minister Grant Stewart, said he struggled to get the company to cancel the policy despite repeated phone calls and emails.

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Grant Stewart, whose son was badgered into buying insurance, leaves the royal commission on Tuesday. Picture: AAP

The commission also saw evidence of Freedom Insurance’s pushy sales culture, including rewarding the best salespeople with Vespa scooters and trips to Bali.

One email for a sales contest included a picture of Tom Cruise in his 1996 film, Jerry Maguire, with a speech balloon with the line “show me the money!”. Another contest email had a picture of rapper 50 Cent with a handful of cash.

The commission heard Mr Stewart found out his son, who has Down syndrome, bought the insurance when a letter arrived from Freedom Insurance in June, 2016.

At the time, the company told Mr Stewart the person who sold the policy did not realise his son had an intellectual disability.

The call revealed a salesman bombarding the young man with information, with the 26-year-old offering hesitant, one-word answers.

Mr Stewart said his son did not understand what was happening.

When he pleads: “I need to go”, the salesman pressures him for bank details to set up direct debit.

Freedom’s chief operating officer Craig Orton on Monday. Picture: AAP

Freedom’s chief operating officer Craig Orton acknowledged he believed the salesman knew what he was doing.

“I think he knew that person was not capable of understanding. He should not have been sold the product,” he said.

He apologised to Mr Stewart for the treatment of his son.

The person who sold the policies was eventually sacked.

Outside the commission, Mr Stewart said his son, now 28, was taking steps to independence after his confidence was hit by the experience.

“He’s transitioning to independent living this week — as we speak — and it has taken the last couple of years to restore some confidence to believe he could do that,” he said.

Consumer Action Law Centre lawyer Philippa Heir, who assisted Mr Stewart, said the case showed why the unsolicited sale of financial products should be banned.

ClearView chief risk officer Gregory Martin on Monday. Picture: Aaron Francis/The Australian

CLEARVIEW’S CALL CENTRE SCRIPTS

UNDER-fire insurer ClearView agrees it had call centre training scripts that aimed to stop people getting time to understand the insurance products being sold, the royal commission heard.

The insurer also revealed it had agreed with the corporate cop — the Australian Securities and Investments Commission — that it would compensate premiums to 32,068 clients who had been pressure-sold insurance products over the phone.

While a compensation amount was not revealed, ClearView said in February this year the compensation bill was $1.5 million for only 16,000 customers.

At the same time, the commission was told the head of direct sales at the insurer advocated offering incentives to sales people — including international trips and accommodation — that would be presented as training to get around the regulators.

The head of direct sales was not named at the commission.

Counsel assisting, Rowena Orr QC, said the manager was advocating breaching laws.

“So the head of direct sales within ClearView knew that this was conflicted remuneration, a breach of (Future of Financial Advice) reforms, knew that it would breach regulatory provisions, knew that it was a breach of the law, and therefore, elected to package it deceptively as a training and education trip,” Ms Orr said.

ClearView chief risk officer Gregory Martin said he did not know if it was a breach of the law but the fact the manager wanted to “circumvent” regulations concerned him.

Mr Martin said this prompted closure of the business, although the manager did not face “consequences”.

The commission was shown an email from the rogue manager to his bosses saying a trip to Queenstown offered as an incentive for staff was “not a junket” and should be considered an “investment” in recruitment rather than entertainment.

“It was just inappropriate,” Mr Martin said.

The commission was also shown an email from the same division labelled “let it rain gift cards” as another incentive.

The image showed a picture of a person with an umbrella which was dangling with what looked like cash on strings.

The commission also heard the compliance and quality assurance team were working too closely to sales staff and only moved away from them after complaints from the corporate cop.

Ms Orr also pointed to complaints that the quality assurance and compliance team was under- resourced.

The commission was also played phone calls by ClearView sales people and shown training scripts.

Ms Orr said ClearView had call scripts to get people to sign up immediately and not consider their decision.

She said they would “wear down customers”, as, if they were given time they may not purchase the products. The script encouraged sales people send out the product documents after they were signed up over the phone, rather than having customers read them first.

“This resulted in products people didn’t need or want,” Ms Orr said.

“Yes it did,” Mr Martin said.

He agreed the script would either “wear them down or side step them”.

ClearView eventually agreed with ASIC to compensate the premiums of 32,068 customers it could not be sure were not pressure-sold products.

Mr Martin acknowledged the compensation was not for all customers who bought products. He said there were 9000 people who had held on to their accounts for years who had been sent a letter offering them a chance to have their case reviewed.

Ms Orr said this meant they had to opt into the compensation. But Mr Martin said they didn’t have to “explain anything” to have their case reviewed.

Mr Martin also agreed that ClearView potentially breached a range of laws around not training staff properly, misleading customers and not doing enough to monitor staff.

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