RC urged to hold life/risk board members to account
The Royal Commission should be directing its attention to the board members of companies which have fallen short of community expectations for breaches of their directors’ duties, according to the Consumer Action Law Centre (CALC).
In a submission responding to the insurance hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the CALC submission specifically pointed to directors’ responsibility for the company’s direct life/risk business.
The CALC submission argues that the directors should be held responsible because they were legally obliged to be aware of the company’s activities and any harm those activities might do to ClearView’s reputation.
“We submit that where the Commission finds misconduct or conduct that falls below community expectations, and that conduct exposes the company to significant risk of harm (including harm to its reputation), it is open to the Commission to also make a finding that the directors and other officers have breached their duties under the Corporations Act,” the CALC submission said.
It said such a finding was important to ensure there was accountability among the leadership (including directors and senior management) for misconduct or conduct that had fallen below community standards and expectations.
The CALC cited as an example that “despite being aware of compliance shortcomings, in particular significant issues with unsolicited calls, ClearView failed to take meaningful steps to address this conduct”.
“This allowed staff to continue to engage in problematic and harmful sales conduct over a number of years, resulting in approximately 300,000 - 303,000 breaches of the anti-hawking provisions of the Corporations Act,” it said.
“The type of sales conduct ClearView encouraged included objection handling, which was said to increase a salesperson's chances of selling by 50 per cent,” it said.
“ClearView admitted that its remuneration structure, culture of aggressive sales tactics and compliance programme deficiencies caused these problems, and that its culture was one that tolerated or encouraged aggressive sales tactics at the cost of compliance.”
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