PM apologises for lack of action on banks

Scott Morrison expressed his ‘regret’ yesterday at holding off from calling a royal commission into the financial services sector.

Freedom Insurance chief operating officer Craig Orton, right, leaves the banking royal commission in Melbourne. Picture : David Geraghty

Scott Morrison expressed his “regret” yesterday at holding off from calling a royal commission into the banks as he lashed the “shocking” and “despicable” treatment of the father of a Down syndrome man who was mocked by Freedom Insurance employees as a “bloody whinger” when he attempted to cancel the useless and expensive insurance policy forced on his son.

“Of all the problems I was seeking to (address) in the banking and financial industry, the real hurt being felt by Australians also needed to be addressed,” the Prime Minister said in question time.

“I ­regret we didn’t do it earlier.”

Mr Morrison’s admission came as Josh Frydenberg slammed the misconduct of another independent life insurer, ClearView, and warned that stronger penalties given to the corporate regulator would be deployed in cleaning up the scandal-ridden sector.

“The ClearView experience and the 300,000 alleged breaches (of criminal law) for providing unsolicited advice was clearly wrong,” the Treasurer said.

Mr Morrison’s and Mr Frydenberg’s responses followed another day of searing revelations at the fin­ancial services royal commission, including Commonwealth Bank admitting it purposely deceived the Financial Ombudsman after it rejected a life insurance claim based on out-of-date medical definitions of a heart attack.

The most reprehensible behaviour, picked through in excruciating detail, involved Freedom Insurance, which ran a number of high-pressure outbound call centres, pushed tens of thousands of policies on unwitting customers and urged its agents to sell “frenetically” by offering them luxury trips to Bali and other ­bonuses.

Father and Baptist minister Grant Stewart had earlier expressed his dismay at the way Freedom sales agents spoke about his family, saying they had used language he “couldn’t repeat in the pulpit”.

Internal chat logs displayed at the commission revealed boiler-room banter between “retention” staff who were paid lucrative ­bonuses to convince thousands of customers not to cancel their ­funeral insurance policies.

Discussing Mr Stewart’s ­attempt to cancel the policy ­multiple times, one employee ­labelled him a “bloody whinger”.

The first agent said “his son sounds not normal tho”, adding “strange” and “but the dad sounds like he’s gonna take it further”. The reply was: “I don’t know what he expects to get out of it lol.”

In another email exchange, an agent asked her colleague to look at the cancellation request. The colleague replied “No”, and the first agent replied with 25 sad faces.

Testifying for a second day at the Melbourne Federal Court, Freedom chief operating officer Craig Orton said the mocking of Mr Stewart was “totally inappropriate” and conceded the company’s attempts to convince him to keep the policy fell below consumer expectations.

In a short statement, Freedom boss Keith Cohen said the group was deeply sorry.

Freedom employed a team of 30 staff members whose job was to convince customers who wanted to cancel policies to continue to pay premiums.

Of the almost 40,000 cancellation calls Freedom received over the last financial year — more than 70 a day — about half were from people who could not afford the cover. Only a quarter of these customers were successful.