The Federal Court has handed down combined penalties of $13.5 million to Select AFSL and its sales partners, and a five-year disqualification from managing corporations to Director Russell Howden. 

A year ago, Select, BlueInc Services and Insurance Marketing Service were found to have engaged in unconscionable conduct when selling life, funeral and accidental injury insurance. 

The case, brought by the Australian Securities and Investments Commission (ASIC), concerned the mis-selling of insurance over the phone to consumers, including First Nations consumers from remote communities. English was not the first language of many of these consumers. 

Select and BlueInc were also penalised for conflicted remuneration, including sales agents being given trips to Las Vegas and Hawaii, a cruise to the Gold Coast and a Vespa scooter. 

ASIC commenced action against the businesses in 2019 after Select was the subject of a Hayne royal commission case study examining policies sold in regional and remote communities. 

At a penalty hearing today, Justice Wendy Abraham observed that “misrepresentations were made. High pressure tactics were applied. Sales tactics were used to overbear the free will of consumers. 

“Having made the sales, retention agents ignored the express wishes of the consumers to cancel policies and acted so as to wear them down,” she said. 

ASIC Deputy Chair Sarah Court says some of the consumers involved did not fully understand the products being sold to them, or even that they had been sold insurance.

“ASIC considered this to be a clear case of consumers not having the opportunity to understand and consider the features of the insurance product they had been offered, resulting in poor consumer outcomes,” Ms Court said. 

She said the holiday and Vespa incentives were a key driver of Select’s mis-selling to consumers and were condoned by Mr Howden, who was given a penalty of $100,000 for breaching his directors’ duties. 

Select sold insurance issued by St Andrew’s Life Insurance under the brand names ‘Let’s Insure’ and ‘FlexiSure’. The regulator’s case focused on the mis-selling of insurance over the phone to 14 consumers, ten of whom lived in remote communities.  

Sydney-based Mr Howden founded BlueInc in 2004 and created and ran PrefSure Life. He formerly held executive positions at Capital Alliance Life, AA Life and American International Group in South Africa.  

See the court judgement here.