Exploited and sold ‘useless’ insurance

Aboriginal people with poor financial literacy are routinely targeted to buy useless insurance, dud cars and high-interest loans, the commission has heard as it moves to Darwin, where it will spend most of the week focusing on indigenous people, who often suffered “financial exclusion”, senior counsel assisting the commission Rowena Orr QC said.

One company, Clear View Life Assurance, signed up customers without their consent, the commission heard on Tuesday.

Many residents tended towards “gratuitous concurrence” in which they said “yes” and agreed to propositions even when they didn’t agree, Australian Securities and Investments Commission (ASIC) analyst Nathan Boyle said.

ASIC had listened to phone calls involving Clear View and Aboriginal customers after complaints of misconduct that led to it being forced to repay $1.5 million and facing a ban.

“What we heard in some of those calls was people being walked through the process of signing up to a funeral or life insurance policy and they were saying ‘yes’ or ‘mmm’,” Mr Boyle said.

“We’ve seen consumers that said the telephone representative would ask them, ‘Can you provide us with your bank details?’

“They say, “I don’t want to pay anything’ (and are told), ‘No you won’t have to pay anything now, just provide us with your bank details, yes, okay?’

“And they provided the details and ended up being signed up to policies they never intended being signed up for.”

Indigenous people, who often suffered “financial exclusion” and “poorer economic, social and health outcomes”, said Ms Orr.

Cars break down in a couple of weeks … they never get fixed, Ms Edwards told the commission. Picture: News Corp.

Cars break down in a couple of weeks … they never get fixed, Ms Edwards told the commission. Picture: News Corp.Source:News Corp Australia

Car dealers also targeted indigenous people with high interest loans and useless insurance, taking advantage of needing a car in remote communities, said Financial Counselling Australia’s Lynda Edwards.

“Some car dealers will actually drive into communities with trucks with cars on them to sell them when they know that royalty payments are coming into the community,” she said.

“Usually these cars then break down within a couple of weeks … the cars never get fixed.” Aboriginal and Torres Strait Islander people in remote communities had a very limited understanding of banking products, the hearing heard.

Mr Boyle described how one matter ASIC investigated involved Aboriginal people being charged 48 per cent interest under a car loan, the maximum legally allowed.

‘SORRY BUSINESS’

Aboriginal woman Tracey Walsh will give evidence about being signed up to an expensive funeral insurance policy by The Aboriginal Community Benefit Fund, a Gold Coast company that has falsely portrayed itself as indigenous-operated.

“Sorry business” after an Aboriginal person’s death is a major, expensive ritual that can last for weeks, so the targeting of indigenous Australians for funeral insurance plans is a special focus of the banking royal commission.

The Aboriginal community Benefit Fund and Select AFSL have been accused of preying on indigenous Australians, including children, by signing them up to useless, costly policies they don’t need and can’t afford.

Bryn Jones from funeral insurer ACBFoutside the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Darwin on Tuesday. Picture: (AAP/Glen Campbell

Bryn Jones from funeral insurer ACBFoutside the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in Darwin on Tuesday. Picture: (AAP/Glen CampbellSource:AAP

Ms Walsh and Kathy Marika will give evidence about their dealings after being signed up by the two companies.

Some indigenous Australians have been paying for four or five funeral insurance policies for their families, consumer groups say.

The Department of Human Services has stopped funeral insurance providers from using its Centrepay bill paying service for people receiving Centrelink payments.

The hearings will also examine the obstacles Aboriginal and Torres Strait Islander people encounter and their experience with financial services entities. ANZ executive Tony Tapsall will be questioned over the bank’s conduct in remote communities including providing overdraft facilities and charging fees.

About author