Former RC case study receives penalty for unconscionable conduct
The Federal Court has imposed a combined $13.5 million penalty on Select AFSL, BlueInc Services, and Insurance Marketing Services for engaging in unconscionable conduct.
Select AFSL was a subject and case study in the Hayne royal commission and previously appeared in court last July.
The court also imposed a penalty of $100,000 on the former managing and sole director of Select and BlueInc, Russell Howden, for breaching his directors’ duties and he will be disqualified from managing corporations for five years.
ASIC’s case concerned the mis-selling of life, funeral, and accidental injury insurance over the phone to consumers, including First Nations consumers from remote communities, where English is not their first language.
ASIC deputy chair, Sarah Court, said: “The penalties handed down today should remind companies of the importance of putting the customer first. In some of these cases, the consumers involved did not fully understand the products being sold to them or even that they had been sold insurance in the first place.
“ASIC considered this to be a clear case of consumers not having the opportunity to understand and consider the features of the insurance product they had been offered, resulting in poor consumer outcomes.”
The court also penalised Select and BlueInc for conflicted remuneration contraventions, which included sales agents being given a cruise to the Gold Coast, a Vespa scooter, and trips to Las Vegas and Hawaii.
“These unlawful sales incentive programs were a key driver of Select’s mis-selling to consumers. The incentive programs were condoned by the managing director, which is why ASIC pursued penalties for the companies and the director,” concluded Court.
The matter has been adjourned until 5 July 2023 for submissions on when the orders, including in respect of the penalties imposed, should be entered.
AUTHOR
Laura Dew
Recommended for you
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
Morningstar has made two business development appointments to drive the growth strategy of its financial advice software, AdviserLogic.
