CBA’s life insurance arm CommInsure is alleged to have committed more than 80 breaches of Australia’s cold-calling law, facing up to $1.75 million in fines by industry regulator ASIC.
ASIC has accused CommInsure of enlisting telemarketing firm Aegon Insights to unlawfully ‘hawk’ insurance policies, known as ‘Simple Life’, in the course of “non-compliant unsolicited telephone calls”.
The regulator identified 87 separate calls in direct breach of hawking exceptions in the Corporations Act. Each recorded breach attracts an estimated $21,250 in fines.
CBA is also being charged with failing to present full details of the product disclosure statement (PDS) to potential customers, a mandated requirement when selling financial products.
In a statement, CBA revealed it had self-reported the matter to regulators.
“The alleged contraventions relate to telephone sales of Simple Life insurance products by CMLA (Colonial Mutual Life Assurance Society, CommInsure’s trading name) in the period 7 October 2014 to 16 December 2014, a practice that ceased at the end of 2014,” CBA said in a release to the Australian Securities Exchange.
“CMLA reported breaches of anti-hawking provisions to ASIC. CBA and CommInsure are considering the matter, and CBA does not intend to comment further at this time.”
The formal charge against CBA is a further sign that regulators are taking a more concerted stand against such practices, particularly in the wake of Commissioner Hayne’s rebuke of the life sector and the watchdogs themselves for their soft-handed approach to unsolicited telesales.
In July this year, the watchdog announced it had sought to clamp down on unsolicited phone sales of life and consumer credit insurance, recommending a ban on the practice and prosecutions for overly aggressive sales of insurance products.
At the time, ASIC Commissioner Sean Hughes said: “ASIC will step in to stop practices that lead to poor consumer outcomes and destroy trust in the system. It is only fair that consumers have a proper opportunity to consider which insurance product best meets their needs and then compare alternative products, without feeling pressured to make a purchase.”
While CBA had agreed to sell CommInsure to AIA in 2017 (though yet to be waved through by the regulators), the bank remains liable for the breaches, which occurred in 2014.
The case is due to be presented to a Sydney court in November.