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  HOME | Business & Economy (Click here for more)

Australia’s Biggest Bank Faces Charges, Fines for Alleged Hawking Practices

SYDNEY – Australia’s largest bank faced 87 criminal charges on Friday after its former insurance arm was accused of breaching anti-hawking laws, which could carry fines of up to $1.2 million.

Australia’s independent corporate regulator, the Securities and Investments Commission, accused CommInsure – the Commonwealth Bank of Australia’s subsidiary insurance business at the time – of making unsolicited cold calls hawking a life insurance policy to potential customers.

This marked the first criminal case brought against a big bank in Australia for these types of aggressive sales practices that would constitute a violation of the 2001 Corporations Act.

According to the ASIC, CommInsure hired a telemarketing firm called Aegon Insights Australia to cold-call people in an attempt to sell them insurance products under the brand “Simple Life” between Oct. 7-Dec. 16, 2014.

The telemarketers also failed to adequately explain the complex details of the insurance’s terms, cost and benefits to customers in a bid to mislead them, the regulator claimed.

These alleged abusive practices took place years before CBA sold its insurance arm to the Hong Kong-based AIA Group.

For this reason, the ASIC considers CBA liable for the alleged crimes, as it also provided – through CommInsure – its existing customer database to Aegon Insights, which used the data to make the cold calls.

If found guilty on all 87 counts, CBA could be fined up to 1.8 million Australian dollars.

“CBA and CommInsure are considering the matter and CBA does not intend to comment further at this time,” the bank said in a statement.

The first hearing in the case is scheduled for Nov. 19 at a Sydney local court.

The lawsuit will be brought by the office of the Commonwealth director of public prosecutions, the ASIC said.

It is the first criminal case involving one of Australia’s top four banks since an inquiry by the banking royal commission revealed last year that the big lenders often prioritized profits over customer service by forcing expensive or inappropriate financial products on consumers.

In some instances, customers were billed for services they were never provided or sold worthless insurance policies. Other examples included Colonial First State – another CBA subsidiary – intentionally refusing to transfer clients from high-fee accounts to low-fee ones in spite of federal regulations mandating the move.

 

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