ClearView Wealth’s chief actuary and risk officer Gregory Martin returned to the witness box this morning, where he was questioned by counsel assisting Rowena Orr QC about the company offering a travel and accommodation package to Queenstown as an incentive for sales staff.
The commission learned of an email sent to the head of ClearView’s direct sales division to senior management outlining his plans for the trip. It stated:
We will work with respective departments to reduce tax exposure, FBT implications and circumvent regulatory barriers. Packaged as a training and educational trip in lieu of FOFA conflicted remuneration.
Ms Orr questioned Mr Martin about this internal email that was brought to his attention in the final quarter of 2016.
“So the head of direct sales within ClearView knew that this was conflicted remuneration, a breach of the FOFA reforms, knew that it was a breach of the law and therefore elected to package it deceptively as a training and educational trip?” she asked. “What action did you take?”
Mr Martin replied that the trip did not go ahead, and that he discussed it with the managing director and CFO.
“There was no response from me. I don’t actually know that I read all the way to the bottom [of the email]. But I visited the MD and CFO and said ‘over my dead body’,” he said.
Ms Orr asked if there were any consequences for the head of sales, given his plans to circumvent the law and package the junket as an educational trip. Mr Martin said there were no consequences for the head of sales.
“None of you took any steps to sanction or discipline the head of sales over his intention to breach the law,” she said.
Unsolicited calls
On Monday, Mr Martin revealed ClearView’s decision to begin selling life insurance direct to customers over the phone, and the targets that were set for salesmen, were based on what competitors had achieved.
“If we had our time again, we wouldn’t do that business,” he said.
ClearView was one of six life insurers examined in ASIC’s 2016 review into the sector, which monitored hundreds of outbound sales calls.
Ms Orr brought the commission’s attention to the anti-hawking provisions outlined in the Corporations Act, which prohibit the sale of life insurance to a person in the course of or because of an unsolicited telephone call, unless the insurer complies with a number of requirements. Those include being placed on a ‘do not call’ register, giving the customer a PDS before they purchase the insurance and having the PDS read to them.
ASIC’s guidance on the anti-hawking provisions outline that a phone call is unsolicited unless it takes place in response to a positive, clear and informed request from a customer.
“Did ClearView breach the anti-hawking provisions, Mr Martin?” Ms Orr asked.
“Yes.”
“How many times?”
“I think out of the 32,000 policies sold it was maybe 40 per cent of them. I haven’t got the exact number, but maybe 10,000 or 12,000 times.”
Mr Orr asked Mr Martin when ClearView breached the anti-hawking provisions. He replied that the breaches occurred from late 2013 to the end of 2016, when the sales scripts were changed.
“Breach of the anti-hawking provisions is a criminal offence, isn’t it, Mr Martin?” Ms Orr asked.
“I understand that, yes,” he replied.
It is blatantly obvious that ASIC has never had any intention of applying and enforcing the financial advisory laws to the banks and large insurance companies. ASIC, by their past actions, have shown that they are tough by destroying individual financial advisors who rely on the banks and institutions for information. Perhaps its time that the heads of ASIC are held to account for their actions. Why is Greg Medcraft not before the RC answering for what was not done on his watch?
Clearview has long had a sales over compliance culture. I’m not sure why they kept trying to deflect it being their Direct business, ultimately the MD and CRO among others still were responsible for that division and what went on there.
ClearView is a listed company, with a market capitalisation of around one billion. It’s part owned by Sony, and run by ex CBA staff.
It has already told the RC it expects no further ASIC action.
300,000 breaches of the criminal law. 300.000. Which life office does not know it’s criminal to sell life insurance like this?
Is ASIC serious?
But it’s not as bad as bank tellers selling dodgy super, so if ASIC gets tough with Clearview it has to get tough with the banks, and Kell and Mullaly are scared to do that.
Can’t upset their mates.
Here we go again- Sales-Sales_sales. It’s the damn culture that the RC and ASIC have ignored and its the damn root cause of all this damn new regulation. Don’t jam real advisers, these sales staff have no ethics no responsibility and no knowledge. Rid the industry of this culture NOW and we just might get some cred back. If not, no matter what education is enforced, the issues will not go away. The regulator has been silent in taking action to date which is why advisers stopped reporting, zero action. The S M H will have a field day reporting but in the end the joke is on ALL associations and ALL real advisers. The rules have been around for a long time to address the issues but nil action from regulators etc. Sadly I doubt if any real meaningful action will result from this mega million commission. No guts the lot of you but I live in hope to be proved wrong.
Selling direct life styles insurances is always going to be dangerous due to the differences in whats offered and they are sold by people who in the main have no qualifications to do so WHY then are we surprised
Clearview are also the group that encouraged advisers to “roll” clients out of existing policies into clearview policies is that not facilitating churning
This is exactly why LIF should never have happened.Direct Life Insurance should be banned immediately as the potential risk to the consumer is immense due to a lack of understanding, lack of considered explanation and a lack of personal advice specific to the consumer’s needs.
If ASIC created a ficticious issue with insurance policy churn in order to satisfy an agenda, then they have seen nothing yet in relation to the potential implementation and claims issues that will come from the direct insurance area.
I hope there is now great consideration given to allowing the professional risk insurance advisers who have an inherent reason to provide quality advice and service to their clients to be allowed to practice without relentless and repetitive attack that has been in train for almost the last decade.
Thanks O’Dwyer and your extremely dodgy FSC buddies.
Both O’Dwyer and the FSC are complete disgraces and should be held accountable for all the unpaid claims and illegally sold policies and be made to refund the premiums.
they are being made to refund all premiums or though most didnt pay anything. Happy?
The Industry needs to highlight that what went on at Freedom was NOT advice and NOT performed by members of the AFA/FPA it was done by ill-informed volume based telesales people who one day are selling insurance and the next day they are selling something else
the young men and women who actually do these dodgy calls, take the cash money and to the next gig. Never a thought of responsibility from them or applied to them..
The people selling these policies are just reading scripts that Management and the CEO’s have put in front of them. The Management and CEO’s all need to be sacked and banned..
that’s right don’t blame those poor souls who are just doing a job, blame those higher ups who know and have conceded these policies are junk, violated the prevalent laws thousands upon thousands of time, KNOWINGLY
If you listened to the CV witness they developed their own scripts. I get that if execs were incompetent, with the salaries they are on, they should be punished, but with the Freedom case, taking advantage of a clearly mentally disadvantaged person, the guy is a total low life and i how you can give the old ‘poor soul’ a way out is beyond me.
and yet it is fine for politicians, solicitors (like Orr), Doctors, pharmacists, even air conditioning and heating businesses to take the same junkets with NIL consequences? Most of which are paid for by groups chasing their ‘SALES’
Hypocrisy and over the top bs beyond belief
Just listened to a fathers despair at the RC, and the recording of calls from the call centre to his obviously disabled son.
Enough already, for Gods sake!!!. Direct sales of life insurance, hiding under ASICs GENERAL ADVICE farcical umbrella, ARE A TOTAL DISASTER AND WILL ALWAYS BE RORTED !!!!! It should be blatantly obvious to even the dumbest of ASIC lawyer that direct sales of life insurance products , WITHOUT PERSONAL ADVICE, does not pass THE PUB TEST. That means life companies and their associated entities, and the BANKS, should cease and desist immediately from TV ads and out going “unsourced” calls..
So what happened between 2013 and 2016 ?? If their is no compliance done by the policeman ie ASIC , then there is “no real law ” as we have seen by some in the community , time and time again. Are you listening ASIC
All risk advisers are salesmen. Sales is not a dirty word until it comes to the “fee for service” RORT that has replaced that nasty word commission. Every FP charging all their clients base a fee for service regardless will be sued in the future.
You will be recalled and made to refund every client unless you can show clear evidence that it was A) Warranted/Needed & B) At a level that justifies the service fee(ie your annual review meeting will not cut it).
Insurance must be sold, fee for service should not be.
I believe direct life insurance has been banned in the UK. Australia should follow suit.
Just ask ODwyer, it’s really the Financial Advisers fault – it’s always the Financial Advisers fault.
It’s never Management, CEO’s or anyone paid millions to be in charge.
ODwyer brought in LIF reforms to reduce Adviser income, make Advisers lives harder so the Banks and Insurance companies could flog more Dodgy Direct Life Insurance via any means possible.
ODwyer – you need to be held accountable for your actions as do all these Managers and CEO’s.
Its astounding how incompetent she is/was. What’s more concerning is she will never be held to account for the mess she has created. She should not have a job in Gov’t.
As much as I hate to say this – because the alternative is so much worse, I don’t think she will have a jobh for much longer and I damn well hope she doesn’t.
ASIC funding fee – $1,000.
TPB Fee – $800.
Ever reducing remuneration.
Longer responsibility periods.
Ridiculous education requirements…
Yep, nick off O’Dwyer. You destroyed this industry.