ASIC’s review of ClearView sales calls “found it used unfair and high pressure sales practices when selling consumers life insurance policies” over the phone.
The review also found that 1,166 of the 16,000 affected customers were “residing in high Indigenous populated areas who were unlikely to have English as their first language”.
ClearView sales staff were found to have “made misleading statements about the cover, the premiums and the effect of any of the consumer’s pre-existing medical conditions, did not clearly obtain consumer consent to purchase the cover before processing the premium payments, and used pressure sales tactics to sell the policies”, ASIC said.
In response to ASIC’s findings, ClearView will refund all bank fees and interest to customers with high initial lapse rates, and refund 50 per cent of premiums and interest to customers with ongoing lapse rates.
Additionally, the insurer will offer eligible customers a sales call review and remediation where necessary, engage EY to provide independent assurance over the remediation program and cease selling life insurance directly to consumers who have not sought personal financial advice.
“Purchasing life insurance is a key financial decision for consumers, and all the information provided to them must be clear and balanced,” said ASIC deputy chair Peter Kell.
“Insurers should properly supervise their sales staff and ensure that no misconduct is occurring.”
ASIC said this outcome was the result of work undertaken by its Indigenous Outreach Program.
I refuse to recommend TAL due to their heavy involvement in junk insurance. Will now add Clearview to this “do not touch” list. Any others that people know of that advisers should stay away from?
Quoting the Financial Review “ClearView chief executive Simon Swanson said the insurer had shuttered its direct life insurance in mid-2017, a move unrelated to the ASIC review, and would now focus on its larger financial adviser distribution channel.
“We believe that the direct life insurance outbound tele-sales model is no longer economically viable or socially acceptable due to increasing client acquisition costs, rising consumer expectations and heightened regulatory scrutiny,” he said.
I think TAL will be the next in line for a big hit.
I think Simon Swanson is saying that direct sales are no longer financially viable because you get caught telling porkies (damn those regulations and scrutiny) and then have to refund premiums on top of very high lapse rates.
He also allegedly said that shutting the direct life sales division was unrelated to the ASIC review. Yeah right, completely unrelated. Elephants can fly also.
Disgraceful behaviour from a life company.
I read all these comments and just think how so glad I am to be out of that bastardised industry. I can see all the frustration coming out. Sorry folk who are left, it will only get worse. It is corrupted, yes how can direct insurers get away with it while advisers have to cop all the compliance nonsense which will ultimately force them out of business. I always said that the banks should never have been involved in insurance or wealth and how true that turned out to be. ASIC just asleep except when it comes to individual advisers who are much easier prey.
It is anything but a level playing field.
Do what I did, if you are in a position to retire just get out, life is too short.
This is a good example of how the FSC and insurers will ultimately shoot themselves in the foot. They think that with advisers out of the way they can sell more junk direct insurance, more profit, less claims to pay.
But look at this example. Clearview sold 16000 policies which with the cost of marketing and sales staff would be unlikely to make them a profit for a few years. They now have to refund premiums and conduct reviews (more costs). They are likely to have had a 40% lapse rate anyway (typical in the direct junk insurance space).
I would love for Clearview to provide the cost vs. profit for these 16000 customers they sold the junk insurance too and would be willing to bet they have now lost money overall. Not to mention the field day the no win no fee lawyers are going to have in the future with direct insurance.
Then I would love them to compare the cost vs. profit to the business they received from advisers who with the other FSC cartel members they are determined to wipe out.
It is a farce that there are no penalties to the sales reps or to clearview execs for this. If an adviser had ripped off customers like this we would be banned. Why such double standards. Why do the insurers continually get away with this kind of predatory behaviour with no penalty.
It will be interesting to see what happens and who ASIC blames for everything when there arent any Risk advisers left due to stupid compliance, educational skills, increasing cost to do business and LIF.
As Ex CFP said, the only way to have insurance sold properly is with full advice on every sale and Know Your Client and Best Interests Duty to apply to all.
Yet industry funds are allowed to set up life insurance without the members permission and rip the premiums out of member accounts! Low income, financially illiterate workers with multiple accounts are blissfully unaware their accounts are being plundered while the more astute members profit through lower fees like Morlocks feeding off the Eloi. I applaud ASIC’s action against Clearview but this is small-fry compared to the bigger issue of ‘automatic acceptance’. At least Clearview asked for permission!
The actual sales staff at these centres are a lot to blame. They usually backpackers or transient staff who only care about a buck for boozing. they should be monitored better but they just don’t care about customer or company they work.
Clearview to “Cease selling life insurance directly to consumers who have not sought personal financial advice”. NOTE to ASIC-All direct JUNK insurers should be made to operate under these same terms! It’s great isn’t it that these dodgy practices get rewarded by the same upfront commissions that advisers have to bust their arse to EARN under all sorts of compliance red tape and liability risks. AND the high lapse rates from these JUNK policies I bet the insurers just lumps them in with the very small amount from “advised policies” Call me cynical.
Interesting that the only part of ASIC that seems to care about the evils of direct junk insurance is their “Indigenous Outreach Program”. Good start ASIC, but there are also hundreds of thousands of non indigenous Australians who have also been duped by direct junk insurance. Lets hope you can apply the learnings from this Program to the wider community.
Kelly ODwyer, yes your LIF rubbish reforms that help Your FSC bank and insurance company buddies Flog more dreadful direct Life Insurance is such a quality approach.
ODwyer, when more of this direct Life Insurance blows up you need to be held responsible.
Oh the Irony! ASIC’s flawed report 413 and the FSC’s cartel crookedness has led to the LIF meaning ultimately more junk direct sales just like this and just as the FSC members want.
This is just another FSC member selling junk insurance underhandedly to the disadvantaged who know no better.
Caused by ASIC and promoted by the FSC yet no mention of any fines by ASIC against Clearview or no mention of any Clearview execs who orchestrated this being barred from the industry.
And of course no condemnation of Clearview’s behavior by Sally Loane or the other FSC cartel members.
No mention of a breach under the Life Insurance Code of Practice (the Code) 1 July 2017.
So this is acceptable behaviour according to the FSC. No sanction because this behaviour is sanctioned.
“The Code sets out the life insurance industry’s key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their life insurance services, such as being open, fair and honest. It also sets out timeframes for insurers to respond to claims, complaints and requests for information.
The Code covers many aspects of our customers’ relationship with us, from buying insurance to making a claim, to providing options if experiencing financial hardship or requiring additional support. It’s monitored by an independent committee, to ensure effective compliance by life insurers. Insurers CAN be SANCTIONED if they do not correct breaches of the Code.”
And of course no penalty from ASIC.
Don’t forget the FSC’s Life Insurance Code of Practice is just about “try to be nice”, “try to pay claims” “make sure there are 3 insurers on your panel”. It makes no mention of not being able to rip of the uneducated, poor or disadvantaged.
Lets see if Sally Loane comes out of hiding to sanction Clearview. Don’t hold you breath.
What are they thinking? SO much good business out there. Why go to the most disadvantaged communities? Lucky LIF has fixed all these sort of practices from those nasty independent riskies. Hang on not independent riskies at all again, what a surprise to see another insurer based issue instead of independent risk adviser. Actually risk related are their any major independent risk issues? HMMMMM let me think “NO”. But lets smash them anyway, we make the FSC and associated look bad.
Only because independents are too small fish for ASIC to bother.
back to the ‘good ‘ol’ bad days…..
Disgraceful yes but surprising no.
Lets hope the Royal Commission has a good look at the direct marketing and sales of insurance policies. Currently two sets of rules, one for advisers and another for insurance company direct sales.
How about a level playing field and full advice required on all insurance policy sales!