Russell Howden of Select AFSL kept details from commission

The boss of a life ­insurer has been accused of not being ‘frank’ with the financial services royal commission.

Russell Howden outside the royal commission hearings in Darwin yestderday. Picture: AAP

The managing director of life ­insurer Select AFSL, which used high-pressure sales tactics to push Let’s Insure-branded funeral plans on Aboriginal customers, has been accused of not being “frank” with the financial services royal commission after he sought to prevent information being disclosed voluntarily to the inquiry.

Russell Howden, who heads Select AFSL, denied he had not been honest with the royal commission during hearings in Darwin yesterday. Select AFSL sold the Let’s Insure policies that were underwritten by Bank of Queensland’s former life insurance arm, St Andrews.

In a series of emails and letters presented to the royal commission by counsel assisting Rowena Orr, it emerged that St Andrews asked Mr Howden in March this year for consent to share with the royal commission the issues it had identified in Select AFSL’s sales practices with Aboriginal customers.

St Andrews told Mr Howden that Bank of Queensland was aware that the corporate regulator, the Australian Securities & Investments Commission, knew of the funeral insurance ­concerns and may have informed the royal commission. The commission required the bank to tell it about all instances of misconduct and conduct falling below community standards over the past decade. But Mr Howden did not give his formal consent to St Andrews.

In a response to St Andrews, Mr Howden said: “Thank you for your email. We do not consent with the request to voluntarily disclose confidential information of Select about the issues as defined by you.”

Bank of Queensland told Mr Howden it was disappointed with the response. “It is highly likely the royal commission has received or will receive information on both matters from ASIC and will be aware of our relationship,” BOQ said. “If the commissioner becomes aware of the matters relating to Select’s distribution of St Andrews funeral insurance and life insurance policies, he may be minded to issue BOQ with a ­notice to produce material relating to these issues.”

Select again refused consent to disclose the information. Mr Howden said the company received legal advice not to agree with “a blanket waiver” to disclose all confidential information.

“We do not consider there to have been any misconduct or falling short of community standards or expectations arising out of any matter that would bring it within the scope of the banking royal commission,” Mr Howden told BOQ. He admitted to the royal commission yesterday there had been “incidents” at the company.

“You did not voluntarily disclose anything to the royal commission?” Ms Orr asked him. “You did not permit them to disclose the conduct, nor did you voluntarily disclose the conduct?” Mr Howden responded: “Correct.”

“We always said we would co-operate with the royal commission,” he said. “We didn’t want to agree to give a blanket waiver in terms of what was private with our agreement with St Andrews.”

Thy Do in Darwin yesterday. Picture: AAP

Later, Mr Howden agreed that Select’s sales practices had breached the Corporations Act, which prevented the company from providing personal advice to prospective customers.

The royal commission, which is holding the Darwin hearings to probe instances of financial services misconduct in dealing with Aboriginal and Torres Strait Islander people, examined Let’s Insure’s sales practices. It found high-pressure sales tactics drove a huge ­increase in sales to Aboriginal customers. St Andrews, underwriting the Let’s Insure products, discovered a sharp “spike” in 2015 of policies sold to Aboriginal customers. The share of ­funeral policies sold to Aboriginal customers doubled to 8 per cent of all policies.

St Andrews, owned by Bank of Queensland from 2010 and recently sold for $65 million, launched a review of its business following a scathing report by ASIC into the funeral insurance industry.

The royal commission heard that only 2 per cent of customers who signed up for Let’s ­Insure ­funeral insurance policies were sold the policies by telemarketers — and yet it was almost 20 per cent for its Aboriginal customers.

A BOQ spokeswoman said Let’s ­Insure was operating under its own regulatory licences and the bank alerted ASIC to the high rate of Aboriginal customers.

Earlier yesterday, the royal commission heard that sales staff at Select who pushed funeral insurance policies on thousands of Aboriginal customers were not disqualified from an incentive “battle” to win a paid trip to Las Vegas — even if they broke company policies and breached the Corporations Act. Mr Howden said they were not disqualified if they failed to give general advice warnings, failed to obtain consent from customers to set up direct debits, omitted policy exclusions, or gave personal advice.

Royal commissioner Kenneth Hayne asked whether the company’s disciplinary procedures failed to clamp down on illegal ­behaviour. He heard that, under Select AFSL’s points-based demerit system, its sales agents could engage in two unethical sales, or two instances of providing personal advice, every six weeks without being sacked because demerit points were reinstated at the end of the six-week period.