IAG unit Swann incentivised “inappropriate” sales
Insurance Australia Group (IAG) subsidiary Swann Insurance incentivised sales of add-on insurance products that were “inappropriate” for certain customers given their circumstances, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was told on Tuesday.
Benjamin Bessell, IAG’s executive general manager, business distribution and group executive, admitted to Counsel Assisting the Commission, Mark Costello that Swann sold add-on insurance products as part of multi-policy sales incentives offered to motorbike dealerships that may not have been appropriate and were designed only to drive sales with little regard for customers’ circumstances.
“Do you agree that Swann’s remunerations and incentive arrangements … incentivised sales alone?” Costello asked.
“… I would say the predominant motivation or incentive was sales,” Bessell replied.
Costello asked: “It was the exclusive motivation, wasn’t it … the entire point of them was to incentivise sales?”
“Yes, that’s true,” Bessell responded.
Costello continued: “Do you think that these incentive programs incentivised sales that were inappropriate?”
“On occasions that did occur – yes,” Bessell admitted.
Recommended for you
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
