ClearView’s direct life sales business takes regulatory hit
Publicly-listed life insurance and advice company, ClearView Life Assurance Limited (Clearview) will refund approximately $1.5 million to 16,000 consumers and has stopped selling life insurance direct to consumers.
The Australian Securities and Investments Commission (ASIC) said the refund and action by ClearView had followed regulator concerns about its life insurance sales practices.
ASIC said a review of ClearView's sales calls found it used unfair and high pressure sales practices when selling consumers life insurance policies by phone and that these sales were made directly to consumers, without personal financial advice.
It said ASIC's review raised concerns that between 1 January 2014 and 30 June 2017, when selling over 32,000 life insurance policies direct to consumers, 1,166 of which were to consumers residing in high Indigenous populated areas who were unlikely to have English as their first language, ClearView sales staff:
- 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.
In response to ASIC's concerns, ClearView will:
- refund full premiums, all bank fees and interest to customers with high initial lapse rates
- refund 50 per cent of premiums and interest to customers with high ongoing lapse rates
- offer a sales call review to other eligible consumers and remediate if there is evidence of poor conduct
- engage an independent expert (EY) to provide independent assurance over the consumer remediation program; and
- cease selling life insurance directly to consumers (that is, without personal financial advice).
ASIC Deputy Chair Peter Kell said that pressure sales tactics are unacceptable.
“Purchasing life insurance is a key financial decision for consumers, and all the information provided to them must be clear and balanced. Insurers should properly supervise their sales staff and ensure that no misconduct is occurring,” he said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
