CBA faces charges
Insurance arm falls foul of ‘hawking’ laws
A COMPANY formerly owned by the Commonwealth Bank has been charged with 87 counts of breaching criminal anti-hawking laws in the sale of life insurance.
It marks the first criminal case to be launched by a reinvigorated corporate watchdog following the banking royal commission.
The lawsuit against CommInsure is the first of scores being considered by the Commonwealth Director of Public Prosecutors for criminal action against major Australian financial institutions.
The Australian Securities and Investments Commission confirmed it will take the Colonial Mutual Life Insurance Society — trading as CommInsure — to the Downing Centre Local Court in Sydney on November 19.
CommInsure will face charges for offering to sell insurance during “noncompliant” cold calls, which are calls made to prospective customers without invitation.
In a statement acknowledging the charges, the CBA said it and CommInsure “are considering the matter and CBA does not intend to comment further at this time”.
The bank offloaded its troubled life insurance arm to Hong Kong financial services heavyweight AIA Group in 2017, but it retains liability for any legal issues arising from the period in question.
ASIC has alleged CommInsure unlawfully sold life insurance policies — branded as Simple Life — through unsolicited phone calls, and failed to take customers through product disclosure statements as required by legislation.
CommInsure faces criminal penalty and a maximum fine of $1.8 million. The maximum penalty for each of the charges is $21,250.
The watchdog alleges that CommInsure illegally sold life insurance between October and December 2014 through a telemarketing agent called Aegon Insights Australia.
“CommInsure provided customer contact details to Aegon from CBA’s existing customer database,” the regulator said in a short statement.
The Commonwealth Bank has been working on plans to remediate affected customers.
ASIC last year moved to ban unsolicited phone calls for the sale of life insurance.
Federal Treasurer Josh Frydenberg said people who had allegedly perpetrated “criminal misconduct” needed to face the full force of the law but pointed out the financial services sector was “critical to the lifeblood of our economy”.