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4 October 2019
Bank-owned insurer CommInsure faces criminal charges for hawking insurance products as the Australian Securities and Investments Commission (ASIC) takes a tougher approach to misconduct.
The Commonwealth Bank of Australia (CBA) subsidiary has been charged with 87 counts of offering to sell life insurance products in the course of non-compliant phone calls.
The action relates to policies, known as Simple Life, that were sold through agent telemarketing firm Aegon Insights Australia between October and December 2014. The charges each carry a maximum penalty of $21,250, implying a potential total of $1.8 million.
ASIC says the calls to CBA customers were unsolicited and the company did not comply with all of the relevant hawking exceptions in the Corporations Act.
“CBA and CommInsure are considering the matter and CBA does not intend to comment further at this time,” the company said in a statement to the Australian Securities Exchange.
The regulator says it will not be making further comment as the case is a criminal matter before the court and will be handled by the Commonwealth Director of Public Prosecutions.
ASIC Commissioner John Price said in a speech yesterday that ASIC’s ability to take action in general had been strengthened by legislation in March that increased penalties and widened the range of matters that can be taken to court.
“ASIC has advocated over an extended period about the need for penalties in the legislation we administer to be substantial enough to represent a credible deterrent and to meet community expectations as to the seriousness of the misconduct,” he said.
The Director of Public Prosecutions has also received $41.6 million to prosecute briefs from ASIC.
Commissioner Kenneth Hayne was critical of ASIC during his inquiry for responding to misconduct by seeking to resolve issues through agreement, rather than looking to litigate, but Mr Price says the regulator has been hamstrung before recent reforms.
“We are focused on increasing and accelerating court-based enforcement outcomes and we are looking to use the full extent of our new powers and penalties,” he told the Australian Institute of Company Directors in Melbourne.
The Consumer Action Law Centre says the ASIC action against CommInsure underscores the case for an economy-wide ban on product hawking.
“Cold-calling is a lazy cash low for the insurance industry and vulnerable Australians are often the primary target of these unscrupulous practices,” CEO Gerard Brody says. “It’s unethical, it’s wrong and it needs to stop urgently.”
The CommInsure matter has been listed for first mention on November 19 at the Downing Centre Local Court in Sydney.