The corporate regulator has accepted an enforceable undertaking (EU) from ACE Insurance following an investigation into its Combined Insurance division, which found a raft of compliance breaches – including acts of “churning”.
In a statement, ASIC said the EU follows an “in-depth investigation” into misconduct by sales people contracted by ACE Insurance, which “travelled door-to-door” selling and renewing Combined Insurance products across regional communities in Australia.
ASIC said as part of the EU, ACE Insurance has admitted that in the period from 1 January 2012 to 30 June 2014 a limited number of authorised representatives in the Combined Insurance division engaged in the “overselling” of products, “churning” and the sale of “unsuitable policies”.
“ASIC's investigation also focused on allegations of systemic failures within the Combined Insurance division, including poor culture and failure to ensure consumers were given appropriate advice,” the statement said.
ACE Insurance further admitted that during this period it had “failed” to effectively implement a framework to foster and consistently maintain a culture of compliance.
“ACE Insurance is a clear case of how poor culture and conflicts of interest in remuneration have led to poor conduct, resulting in a financial cost to both consumers and the organisation alike. ASIC's priority in this significant investigation was the affected consumers, and we have pursued the best result possible for those consumers,” ASIC deputy chairman Peter Kell said.
The Combined Insurance division of ACE Insurance operates a business that includes the sale of sickness and accident insurance policies to individual consumers.
ASIC said the company’s sale force consisted “largely independent contractors” who were appointed authorised representatives or sub-authorised representatives under its AFSL.
Under the EU, ACE Insurance will be required to appoint an independent expert to review Combined Insurance's compliance systems, implement a remediation plan to compensate affected consumers and make a donation a $1 million to financial counselling and financial literacy initiatives, ASIC said.