CBA life insurance: CommInsure arm charged for unsolicited phone calls

The corporate watchdog claims the major bank’s insurance unit CommInsure illegal sold the financial product on the phone.

The Commonwealth Bank’s former life insurance unit CommInsure has been charged with 87 criminal counts of illegally selling its product over the phone, known as “hawking”.

The Australian Securities and Investments Commission claims the insurance business made calls that were unsolicited, which was investigated during the royal commission into the banks last year.

The maximum penalty for each of the charges is $21,250, or $1.8 million in total.

The “hawking” charges are the first criminal charges to go ahead following the royal commission after QC Kenneth Hayne recomended banning the practice in the inquiry’s final report.

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The corporate watchdog alleges CommInsure, through its agent telemarketing firm Aegon Insights Australia, unlawfully sold life insurance policies known as Simple Life over the phone between October and December in 2014.

CommInsure provided customer contact details to Aegon from CBA’s existing customer database.

CommInsure charged with hawking offences https://t.co/3zm94O6xLq

— ASIC Media (@asicmedia) October 4, 2019

Treasurer Josh Frydenberg said earlier that such criminal charges underlines the gravity of the allegations against the financial sector but said the banks are “critical to the lifeblood of our economy”.

“Obviously these are independent regulators who have collated the evidence and that will play out before the courts but it does underline how serious the allegations have been against some of those in the financial services sector,” he said according to The Australian.

“This is not to damn everyone in the financial services sector, of course not, this is a very important part of our economy. Indeed, more than 400,000 Australians are employed in the financial services sector and represents about 10 per cent of GDP.”

Hawking is an outdated sales strategy proven to cause harm to Australians who are pressured into buying something they don’t want or need, Consumer Action Law Centre chief executive Gerard Brody said.

“People are being cold-called by companies seeking to force the sale of products which are complex, unsuitable, or even worthless,” he said.

“Cold-calling is a lazy cash cow for the insurance industry and vulnerable Australians are often the primary target of these unscrupulous practices.

“It’s unethical, it’s wrong and it needs to stop urgently.”

The corporate watchdog alleges CBA didn’t comply with all of the hawking exceptions in the law. Picture: William West/AFP

The Commonwealth Bank sold off the life insurance business in 2017 to Hong Kong company AIA Group but the Australian bank is liable for any criminal proceedings.

The major bank released a statement this morning the phone sales of the Simple Life product ceased at the end of 2014 and it would not be commenting further on the matter.

The Commonwealth Director of Public Prosecutions is prosecuting the case. The matter has been listed for first mention on November 19 at the Sowning Centre Local Court in Sydney.