Banking royal commission: Life insurer benefited from ‘gratuitous concurrence’

Aboriginal consumers are often tripped up when dealing with financial firms due to “gratuitous concurrence,” inquiry hears.

 

Telephone sales staff at independent life insurer ClearView Wealth benefited from a cultural anomaly among Indigenous Australians known as “gratuitous concurrence”, which helped shunt numerous Aboriginal and Torres Strait Islander people into products they didn’t want, the royal commission has heard.

Nathan Boyle, an analyst with the Australian Securities & Investments Commission’s indigenous Outreach Program, told the royal commission Aboriginal consumers often were tripped up in their dealings as financial customers due to a phenomenon known as gratuitous concurrence.

That is where there is a tendency for Aboriginal people to agree to a proposition that is put to them, whether or not they actually agree with the proposition. Mr Boyle said Aboriginal people often replied “yes” to a question they didn’t understand, in a bid to avoid appearing “silly”. “People will agree yes, even to a question that they don’t know what is being asked,” Mr Boyle said.

Kenneth Hayne’s year-long banking royal commission is holding a week of hearing in the Northern Territory capital to probe cases of misconduct in financial services companies’ dealing with indigenous Australians.

Mr Boyle said a recent investigation into life insurer ClearView Wealth found a number of recordings of insurance sales staff who were walking indigenous customers through the process of buying a policy where it appeared they did not want to buy the product.

“What we heard was people being walked through the process of buying a life insurance policy,” Mr Boyle said. “They were saying ‘mmm, mmm’, or ‘yes’.”

But he said Aboriginal people on those calls could be heard saying: “I don’t want to pay anything.”

The call staff responded that the customers did not have to pay anything immediately, but they just requested the bank details so the customers could be charged later.

“People will provide enough information to sign up to a contract even when they don’t want to,” Mr Boyle said.

As part of a wider investigation by ASIC, last year ClearView was found to have sold more than 16,000 policies unfairly over three years through call centres. ASIC alleged more than 1000 of the sales were to customers at indigenous centres who were unlikely to speak English as a first language.

The company made a $1.5 million refund to customers who were the victims of “unfair” and “high pressure” sales tactics and the company promptly shut down the direct sales business, which houses the outbound call centre, following the investigation. The channel represented about 5 per cent of revenue.

Mr Boyle said more employment of Aboriginal staff members at financial companies could go some way to solving cultural issues between indigenous Australians and financial customers.

“Just having a voice that understands … can make them feel much more comfortable,” Mr Boyle said. “It can make people more open and less likely to fall into issues such as gratuitous concurrence,” he said.

“Certainly I would support more employment of Aboriginal and Torres Strait Islander people in the financial services sector.”