Select AFSL and its sales partners, BlueInc Services and Insurance Marketing Service, engaged in unconscionable conduct when selling life, funeral and accidental injury insurance, the Federal Court has found in proceedings launched by the Australian Securities and Investments Commission (ASIC).

ASIC commenced action against the businesses in 2019 after Select was the subject of a case study considered by the Hayne royal commission over the way policies were sold to consumers in regional and remote communities.

The corporate regulator also included Select in its 2018 review of the direct life sales market, where it was found consumers were being harmed by poor sales practices. The review found Select’s conduct to be one of the most egregious.

ASIC prioritised holding the company and its director, Russell Howden, to account by taking court action against Select.

The regulator’s case focused on the mis-selling of insurance over the phone to 14 consumers, ten of whom lived in remote communities. English was not the first language of many of the consumers, and some did not fully understand the products being sold to them or that they had even been sold the insurance.

“In making findings of unconscionable conduct, the Court has emphasised that consumers must have the opportunity to understand and consider the features of the insurance product they’ve been offered,” ASIC Commissioner Sean Hughes said in a statement today.

“ASIC will pursue those who take advantage of consumers, wherever they are, and including in remote parts of Australia. This case serves as a reminder to insurers to ensure their distributors act appropriately and put the needs of consumers first.”

The court found Mr Howden, who was also overseeing BlueInc, was involved in some of the contraventions and breached his duty of care and diligence as a director.

It also found Select and BlueInc provided conflicted remuneration to sales agents, namely, a cruise to the Gold Coast, a Vespa scooter and trips to Las Vegas and Hawaii.

“ASIC is resolutely committed to protecting the most vulnerable consumers where they are targeted by mis-selling,” Mr Hughes said.

“A key driver of Select’s mis-selling was the unlawful sales incentive programs created for the agents, which were condoned by the companies’ managing director.”

The court has not yet listed a date for a penalty hearing.

Click here for the court judgment.