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Hard sell policy: report on the sales techniques and exploitation by insurance agents with Colonial Mutual Life

BILL MAHER: He said it was the greatest stitcher they'd ever invented. Easiest way to write business they'd ever thought of.

DEBBIE WHITMONT: What was his feeling about that?

BILL MAHER: It was just, you know, taking money for jam.

ANDREW OLLE: The glib insurance salesman has come an almighty cropper. Already one big company has paid out millions of dollars to buy off unhappy customers.

Late last week, the insurance giant, Colonial Mutual Life, agreed to a landmark compensation package after being prosecuted over the hard sell tactics of some of its agents. The Trade Practices Commission had taken CML to court for unconscionable conduct in its dealings with 22 remote Aboriginal communities. In agreeing to refund the premium payments of some 2,000 Aborigines, Colonial Mutual Life succeeded in heading off a major public examination of its practices, but as I'm sure general manager Ian Curry is acutely aware, the company has also risked opening the flood gates for claims by other disgruntled policy holders. Aboriginal customers have not been the only CML customers to complain; indeed, as you'll see tonight, Colonial Mutual agents were still using questionable hard sell methods as recently as two weeks ago. Debbie Whitmont reports.

DEBBIE WHITMONT: This is Doomadgee, a remote corner of black Australia, just a dot on the map in the middle of nowhere - a place many would prefer to ignore, it's unlikely to be forgotten in the boardrooms of some of our biggest insurers. One quiet death here, 18 months ago, has shattered a myth about the companies we've trusted the most. They're our biggest and our oldest companies. The life insurers have built our cities and they own more of them than anyone else in Australia.

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DEBBIE WHITMONT: For years, we've been pouring our money into them. We've given them an $80 billion empire. Now for the first time, the life insurance companies are beginning to feel the heat.

GIL HOSKINGS: The '80s was an era of wheeling and dealing. Everybody got involved. It was almost that if you weren't involved in wheeling and dealing, there was something wrong with you.

LOUISE SYLVAN: Essentially, what we are having at the moment is an industry which is responsible for many people's financial future, operating on the same principles in terms of sales, as a used car yard.

DEBBIE WHITMONT: If you're looking for wheeling and dealing, it isn't too hard to find it here on the Queensland Gold Coast. In 1990, one of the major insurers, Colonial Mutual Life, proudly opened its biggest agency, here, in Surfers Paradise. The Queenslanders were setting company sales records and the money was pouring in. The agency was called Tri-global. For Colonial Mutual, it was number one. Its agents sold more policies and made more money for themselves and the company, than anyone else. For Colonial Mutual, Tri-global and its agents were champions, and the brightest star of them all was Tri-global's founder, Lloyd Ross. In the insurance world, he is a legend.

LLOYD ROSS: I've been the number one agent for the National Mutual, number one agent for Colonial Mutual. You might see some of these plaques here - to qualify for those awards, it's not just on production or performance, but also inclusive in that is quality of business. And while ever quality is there, you can be nominated for those awards and receive them.

DEBBIE WHITMONT: For the last four years, Lloyd Ross has personally signed up more customers for Colonial Mutual than any other agent in Australia. He says he holds the life insurance industry record for number of proposals written. When it comes to insurance, Lloyd Ross is the half-billion dollar man and, until recently, the big life offices were right behind him. Lloyd Ross' million dollar Gold Coast home was bought with a low interest loan from Colonial Mutual; so were the homes of other Tri-global directors. In all, Colonial Mutual lent them more than $3 million.

In Sydney, just last August, Colonial Mutual was still celebrating - its New South Wales manager congratulating Tri-global's top agents on a job well done. Now it seems they and other Colonial Mutual agents did their job too well. In its greed for sales, the big life insurer has put its reputation on the line.

This was Colonial Mutual's last frontier, a tiny Aboriginal community in the Queensland Gulf country. Though it's remote and isolated, what happened here in Doomadgee and places like it, tells an ugly story about one of our biggest insurance companies and the way it's done business. During the wet season, Doomadgee is completely cut off, but isolation and distance were no match for the salesmen.

Well, for all the things you can't get here in Doomadgee, there's one thing there's been absolutely no shortage of, and that's insurance salesmen; in fact, for them, this place has been something of a goldmine. Although people here don't have very much money and often don't have much education - they certainly don't know much about financial planning - there's hardly a person in town who hasn't bought some kind of insurance policy; in fact, some have bought two or even three policies. The problem is hardly anyone knows what it is that they bought; hardly anyone would have wanted it if they had known; and almost everyone has lost their money.

In a remote community, there's good reason for buying life insurance - funerals are expensive. In Doomadgee, everything, including the coffin and flowers, has to be flown in from Mt Isa, 300 kilometres away. It can cost up to $1,000. When salesmen promised insurance would pay for the funerals, the Doomadgee people thought their problems were solved.

HILLIA JOHNNY: Yes, I thought it was a good idea when I first heard about it, but didn't think that it would turn out like this, you know, the family won't get anything.

DEBBIE WHITMONT: When Hillia Johnny's son died in December, 1990, he left a wife and five children. Hillia's son had been paying $10 a week, nearly $600 altogether, to Colonial Mutual for what he thought was life insurance. But when he died, Colonial Mutual told his wife she wouldn't get a cent.

IRENE JOHNNY: He bought it because of, you know, they said that he would get money back if anything happens to him. They didn't say what reason. They just said if anything happened to him, that, you know, the family would get something back out of it.

DEBBIE WHITMONT: He told you that, did he?

IRENE JOHNNY: Yes.

DEBBIE WHITMONT: But Irene's husband never had a life insurance policy; instead, the Colonial Mutual agent sold him a savings investment plan, and that didn't help his family either. Although he paid in nearly $600, there was nothing left. All his money had gone in fees and commissions to the agent and the company.

HILLIA JOHNNY: I really think it wasn't enough for Aborigines to understand. All I know that they understood that if they pay for this insurance, that it will cover their wife and family.

DEBBIE WHITMONT: Hillia's son bought his policy from one of the first Colonial Mutual agents to come to Doomadgee, but the number one sales team wasn't too far behind him. When Lloyd Ross and his Colonial Mutual agents rode into town in 1989, Doomadgee was easy pickings. According to people here, up to 150 people, the whole work force, bought insurance policies.

GREG SUTHERLAND: We've had cases where people have told us they were out working, you know, literally out doing some sort of work. We had one bloke who said he was out putting up a fence around a house, and they came up to him explaining this policy to him, and he didn't know much about it, but he thought, you know, it's going to look after his family later, you know, I'll be in it. So, he was out working, out on the fence .. I mean, here are blokes who out working, getting sold policies they don't really understand what it is that's being sold to them.

DEBBIE WHITMONT: In Doomadgee, workplaces like the Garage were goldmines. Murray Waldon was earning about $200 a week, supporting his wife and two children. He agreed to pay $10 a week to Colonial Mutual. He thought it would help him send his son to college. He thought he was buying life insurance.

MURRAY WALDON: Well, at the time, I thought it was a good thing for me and my family, so I just bought it.

DEBBIE WHITMONT: Did you know how much money you were going to get? Did you know much about it?

MURRAY WALDON: No, no idea at all.

DEBBIE WHITMONT: Did he spend very long trying to explain it to you?

MURRAY WALDON: No, just a few rough words and then off he went.

DEBBIE WHITMONT: Murray Waldon bought insurance from the team that came to Doomadgee with Lloyd Ross.

BILL MAHER: He said it was the greatest stitcher he'd ever invented. The easiest way to write business they'd ever thought of.

DEBBIE WHITMONT: What was his feeling about that?

BILL MAHER: It was just, you know, taking money for jam. They believed it was the....

DEBBIE WHITMONT: Bill Maher used to work with Lloyd Ross and Tri-global. He said Lloyd Ross told him the secret of his success: gaining the confidence of the Aboriginal councils that ran the communities.

BILL MAHER: It was just `sign here', you know, just .. and the people just kept signing. Once they got on side with the councils and they had free rein in all the different communities, and that was just .. once one started and they got people in the council to sign, the rest of the community just followed and without really understanding what they had, or had no perception of the policy at all, really.

DEBBIE WHITMONT: Did Lloyd know that, do you believe?

BILL MAHER: Oh, well, you'd have to. You'd have to.

DEBBIE WHITMONT: Selling insurance is one thing, collecting the payments for it can be another, but in Doomadgee there was an easy way. This was the key: the CDEP or work for the dole scheme meant insurance companies could get their payments deducted automatically - something that could never have happened with social security money. All they needed was a signed authority for payment to be guaranteed. By mid-1989, Doomadgee was sending $1,000 of welfare money every week, straight to Colonial Mutual.

GREG SUTHERLAND: It's like having a captive audience, really. You know, they would have came in, the men were in a position to have automatic wage deductions, so they would have paid their policies automatically. You know, if you were at the races, you would have been backing odds-on, you know, it would have been just so easy to do, and because the people wouldn't have understood exactly what was happening.

DEBBIE WHITMONT: For legal reasons, Lloyd Ross said he wouldn't talk to us about the policies he sold on Aboriginal communities, but he denies he misled anyone, and he says Colonial Mutual would have known exactly what he was doing.

LLOYD ROSS: On a weekly basis, we've always, in all of my career, reported how many sales have been made, the type of policies, the amount of premium, the amount of sum insured, and the type of people that we've dealt with during the course of that week. That's normal reporting process required, and it tells the life office and, obviously ourselves, a lot of things about our businesses.

DEBBIE WHITMONT: So the life office is aware of all of that?

LLOYD ROSS: Totally. I mean, an agent is really supervised on all fronts of that person's insurance career. Over the years we've been in situations, most of the time, I've always worked with people, so at every point of sale in most instances there's been another agent, there's been a district sales manager that have been present either at the point of sale or ongoingly looking at the agency on a weekly and monthly and quarterly and yearly basis. So those expectations of working within the guidelines that they set down have always got to be adhered to.

DEBBIE WHITMONT: Even if Colonial Mutual wasn't reading the paperwork, by the end of 1990, the company must have known something was wrong. Doomadgee was asking about the missing death benefits. And there were other problems: people didn't work all the time, some fell behind in their payments. The company had cancelled their policies, yet, in some cases, it kept taking their money. And that wasn't all - by that time, most of the policies that were sold, savings investment plans, weren't worth a cent. The first two years payments had gone in fees and commissions to the agent and the company. Altogether, Doomadgee paid out more than $100,000 to Colonial Mutual, yet it has only about $3,000 worth of insurance. Even outside the communities, people were starting to complain.

ROB HULLS: Well, the allegations that have been made to me, if they're correct, seem to suggest a course of conduct that has been deliberately entered into to rip the guts out of these communities, to take advantage of Aboriginal disadvantage.

DEBBIE WHITMONT: What sort of allegations have been made to you?

ROB HULLS: Well, things such as, if you sign on the dotted line and you have a deceased relative that you want flown back to your community, we're prepared to do that for you; if, indeed, you're in Mt Isa at any time and you're short of cash, just knock on our door and we're prepared to look after you. I mean, these are just gross misrepresentations.

DEBBIE WHITMONT: A Trade Practices Commission investigation has claimed Colonial Mutual agents misled people on five Aboriginal communities. It's alleged nearly 150 cases of misrepresentation, but it's likely there were many more. Colonial Mutual agents went to at least 22 communities. It's claimed the company sold at least 2,000 policies and made at least a million dollars from Queensland Aborigines. Four days ago, under pressure from the Trade Practices Commission, Colonial Mutual agreed to give the Aboriginal communities their money back, but that may not solve the company's problems. It could face claims from hundreds of other people.

Colonial Mutual agents have travelled far and wide selling the same policies in much the same way as they did on Aboriginal communities. In factories and workplaces all over Eastern Australia, the story is the same as it is in Doomadgee. All over Queensland, Colonial Mutual and its agents have been hard at work. In this Gold Coast clothing factory, another group of agents moved in on workers during their lunch break. Monica Chiarelli and her friend Richard are two who were stung. Monica signed up for the minimum payment - $12.50 a week.

MONICA CHIARELLI: We are simple workers and it's nothing, $12.50 weekly, but in Oasis it take one and half hours to work for it, and it's not fair at all, for none, for nobody is fair.

RICHARD: The first thing I realised was, we got a statement from them which was 12 months down the track, and we looked at the statement together and we couldn't believe it because out of 12 months contributions, I think $640, something like nearly $300 was taken out in expenses.

DEBBIE WHITMONT: Monica Chiarelli wanted a safe, short-term investment but the agent didn't tell her that for the first two years she wouldn't be able to get any of her money back, or that for the first year, half her money would go to pay his commission.

MONICA CHIARELLI: Oh, you can't trust anything to anyone any more, and I say it's garbage, absolutely garbage.

DEBBIE WHITMONT: Most of the policies Colonial Mutual was selling in factories and on Aboriginal communities are called `savings investment plans'. Like a lot of what the life insurers sell these days, they've got very little to do with life insurance.

These savings plans have been very good business for the life insurance companies. They've sold about $200 million worth of them across the industry. They've also been very good business for the life insurance agents. They pay some of the highest commissions of any products they sell; in fact, it seems savings policies have been good business for just about everyone, everyone, that is, except for the people who buy them.

The plans are basically savings accounts. Every week, money comes out of your pay and goes to the insurance company, but there are some pretty heavy charges. For at least the first year, most of your money will go to pay fees and commissions for the agent and the company. For the first two years, your investment probably won't be worth a cent, and even if it is, it's likely you won't be able to get your money out any way. It can take about seven years just to repay the costs and break even, and it takes about 10 years for the whole thing to be worthwhile. The trouble is one out of three people give up long before then. For the life companies and the agents, that isn't too much of a problem. They have already been paid.

Andrew Ferguson used to be an insurance agent. These days, he'd rather wash windows. He spent four years selling policies, first for National Mutual, and then for Colonial Mutual with Lloyd Ross' Tri-global. At 23 he was making more money than he cares to mention. He showed us how he was taught to sell savings plans and superannuation in 43 seconds.

ANDREW FERGUSON: My name is Andrew. We look after the voluntary group deduction facility here that your employer set up with our employer, and basically what that is, is an arrangement for your superannuation contributions to come out of your pay and remitted to our firm. What we're here doing today is simply going round and getting enrolments for all the new starters. You're not paying above and beyond the 3 per cent contribution of the employer sponsored contribution? No. Okay, well, I'll get your details down. Take us about two weeks to get the information out to you. Another two weeks and you'll get the document saying it's been accepted, and a couple of weeks after that it should start coming out of your pay. About six weeks time, okay, and that's for your superannuation here at work. Now what do you want to contribute each week?

DEBBIE WHITMONT: I don't know. What do you think?

ANDREW FERGUSON: Ah, most people have been putting in $20 a week; it's tax deductible as well. Twenty dollars, not a problem with that? - okay, that's it. That's it!

DEBBIE WHITMONT: That's all?

ANDREW FERGUSON: Yes, that's all.

DEBBIE WHITMONT: How many of those would you do in a day?

ANDREW FERGUSON: Depending on the day .. I mean, it really depends on how well organised we were - up to 20, 30. I think the most I wrote in one day was 29 proposals in a day and, I mean, that's working fairly hard. Some days we had the campaigns where we worked 24 hours. We write quite a few proposals. I think I picked up about 20 proposals that day, and we'd just go non-stop.

DEBBIE WHITMONT: If Andrew Ferguson signed up just one person for a $20-a-week policy, he made $900 in agent's commission and the life company paid him the whole lot up front. The money was so good that Andrew and other salesmen bought small planes, learned to fly them, and filled them up with agents. The flying squads took their savings plans and hit one town after another, in Queensland, New South Wales, Victoria and even parts of South Australia.

ANDREW FERGUSON: It was very unorthodox the way we worked. We'd work anywhere at any time, day or night. And then one particular time in Canberra, there was a bus, we pulled alongside a bus and I got out and hopped into the bus and I started talking to the bus driver, and I wrote the bus driver as he was driving the bus, while the other fellow drove in the car behind and followed me.

Alongside of the road was probably where we wrote most of our business, our roadside business, talking to people - green keepers, department of main roads; that sort of business, anywhere.

DEBBIE WHITMONT: If they ever build a monument to insurance salesmen, they should do it here. Tamworth in northern New South Wales isn't just famous for country and western music. It's here nearly a decade ago that Lloyd Ross began selling insurance. He worked for one of the giants, National Mutual. Soon, he was their number one.

LLOYD ROSS: Well, I guess that from 1980 all the way through to 1990, that 10 years, I would say that I worked at least 15-hour days, in some cases longer, and today I even work 12 hours a day. And that sometimes hasn't always been restricted to five days a week.

DEBBIE WHITMONT: Gil Hoskings is the general manager of National Mutual.

GIL HOSKINGS: Lloyd Ross was a pretty good agent for us. He was one of our top agents. He was a very enthusiastic salesman. He came to us from the TG company in the old days, so we inherited him as an agent. We trained him. We worked hard on him. He wrote a lot of business, and was, in fact, regarded as quite successful with us.

DEBBIE WHITMONT: Lloyd Ross and other National Mutual agents swept the State. Airlines, councils, police stations, abattoirs and factories were all prime targets - anywhere with lots of workers and, most importantly, a way of getting money automatically deducted from their wages and sent to the insurance company, and it seemed no-one was too busy to be sold insurance. At Australian Airlines, Lloyd Ross sold policies to workers at the check-in counter in a few minutes flat. Not surprisingly, not everyone seemed to get exactly what they thought they were buying.

KEVIN BURKOWSKY: It was quite busy at the time. Didn't have much time to sort of talk about insurance. It was sort of let's see what this is about and get back to work type thing, you know.

DEBBIE WHITMONT: Kevin Burkowsky wanted a savings plan, but somehow he ended up with life insurance. Even he agrees he shouldn't have bought it.

KEVIN BURKOWSKY: No, not in a situation like that where it's very busy because you just can't sort of think `oh well, I can go away for a half an hour and just not worry about my job', you know, so you don't really have .. half your mind is on sort of two things. Sometimes you don't think of all the questions you'd like to ask.

DEBBIE WHITMONT: For the insurance companies, the sales potential seemed endless. They printed lists of workplaces that had payroll deduction systems and gave them to agents, and the money kept rolling in.

ANDREW FERGUSON: They were encouraging agents to write bulk business, because that meant bulk commission, and they were encouraging us to spend, to live a high life, to act like lairs, to travel around the countryside. Professionalism wasn't one thing they were encouraging. We were obviously lining our pockets, but I was lining a lot of other people's pockets as well.

DEBBIE WHITMONT: Hardly a workplace was left untouched. Some, like the railways, was so lucrative, they were plagued by agents from several insurance companies. In 1985, the New South Wales State super board complained to National Mutual and others that agents were misleading workers about their superannuation in implying that employers had authorised them to sell policies. They named Lloyd Ross among the culprits. Finally, two years later in 1987, National Mutual banned Lloyd Ross and others from selling on railway property.

GIL HOSKINS: Yes, I've had a look at the file and I've gone back a bit. There were one or two complaints, mainly because of enthusiastic selling practices as I can judge it, but relative to the business that he wrote, his level of complaints seems to be not excessive. He was an exuberant salesman. We had to make sure he was controlled, and so we had to make sure that we had a strong sales manager dealing with him in these sort of things.

DEBBIE WHITMONT: But even National Mutual's own paperwork suggests its agents were more than enthusiastic. In an internal memo, the company admitted the level of complaints against a number of agents was unprecedented. Even some agents were complaining to National Mutual about its super salesmen. At least one Tamworth agent wrote to the company saying he had been given misleading information to give to customers.

GRANT HOPPER: Well, performance is everything, so if you perform, blind eyes will be turned in every direction, except where they should be looking. So, you know, if your policy count is high enough, you can do what you like.

DEBBIE WHITMONT: Grant Hopper made $70,000 in his first year, selling insurance for National Mutual. He says he didn't see too much control over agents and not much in the way of training or selection, either.

How hard was it to be an agent and to get into the industry when you joined?

GRANT HOPPER: Well, basically, you had to be alive. If you were, you know, they'd basically let anybody in. I don't know of too many people that tried to get in that weren't accepted. I was sent to Sydney for a week to do one training school, and then later on for a the second week's training school. The interesting point was the first training school was to teach you how to sell; the second one, which could be months later, as it was in my case, taught you about the products you were selling.

DEBBIE WHITMONT: So what were you doing in between the two courses?

GRANT HOPPER: Selling products that you didn't know a whole lot about.

DEBBIE WHITMONT: In 1988, Lloyd Ross and some of his agents left National Mutual. They were lured away by another life office eager to compete for market share. Their fame and fortune, this time with Colonial Mutual, continued.

Look in almost any country town in New South Wales or Queensland, and you'll find the trail of Lloyd Ross and his agents. You'll also find a history of complaints and just as long a history of inaction. This Toowoomba bacon factory built its new security system after a visit from Tri-global. The factory complained when agents bluffed their way inside, two years ago. Colonial Mutual said it had no idea of its agents' tactics.

ANDREW FERGUSON: What we'd usually do is we'd approach them. We wouldn't say the words .. the dirty words were `insurance' or the insurance company's name. We were encouraged in our training and whatnot, we were encouraged to create the impression that we were there on an official basis. Something that I was always taught to say by members was that we're here representing an arrangement between your management and our management, and basically we're here .. we'd always say `voluntary group deduction facility', voluntary, voluntary, voluntary, but I think that there was a greater illusion that it wasn't voluntary, it was a compulsory thing to be in.

DEBBIE WHITMONT: When Lloyd Ross sold policies here in Cairns, there were more complaints, this time not only to Colonial Mutual, but to the Australian Lifewriters Association - the body that claims to regulate insurance agents. Kevin Wone bought his policies from Lloyd Ross while he was at work in a government office.

KEVIN WONE: Ross was well aware that I had policies with MLC. He advised me to cash them in, and I used the proceeds to buy an insurance bond with CML.

DEBBIE WHITMONT: Cancelling their original policies cost the family $2,000. Now Kevin Wone has lost again. He's paid nearly $6,000 to Colonial Mutual, but most of his first year's payments have gone in agent's commission; in effect, he's paid up twice to two insurers. In industry jargon it's called `twisting', and it's said to be highly unethical. Kevin Wone complained to the Agents Association and to the company.

KEVIN WONE: I felt that the ethics committee used it as .. well, it seemed to me like it was a joke to them, but even worse, I think, was .. I felt even worse after I talked to CML, a representative of CML.

DEBBIE WHITMONT: In February this year, Colonial Mutual told Kevin Wone it had fully investigated his complaint. The company and the Agents Association came to the same conclusion: there'd been no breach of ethics by Lloyd Ross.

Have you ever led anyone up the garden path?

LLOYD ROSS: No, I haven't.

DEBBIE WHITMONT: Have you ever misrepresented a policy?

LLOYD ROSS: No, I haven't.

DEBBIE WHITMONT: Twisted?

LLOYD ROSS: Never twisted a policy. In fact, Debbie, I've always been able to sell more insurance by establishing with the policy or the client that if they already have a policy, that that's a good policy and they should be happy with it and they should retain it, and that establishes credibility of what I'm saying, because I'm not out there discrediting what they've already done. And that obviously surprises them in some cases, and they obviously feel comfortable with the fact that I've said that that's good what they've already done, and it does assist in generating additional insurance business.

DEBBIE WHITMONT: Do you think people trust you?

LLOYD ROSS: Well, I've got thousands of clients that have still got their policies, all the way since 1977; so, obviously they do.

DEBBIE WHITMONT: Trust you.

LLOYD ROSS: Most certainly.

KEVIN WONE: Well, I feel like I've been robbed actually, personally, I do, because, you know, I've basically contributed .. well, I've paid the premiums in good faith. I felt that I'm doing something for my wife and children and myself in retirement, for my retirement, and I feel that, you know, basically everything that I've put in there has just been wasted. You know, it's sort of like burning the money, I feel, or having it stolen.

DEBBIE WHITMONT: These days it's pretty quiet inside Tri-global. When the Trade Practices Commission took action against Colonial Mutual and its agents, Colonial Mutual cut its ties with Tri-global. Its agents were sacked. Colonial Mutual is doing all it can to dump its one-time star performer.

In the life insurance industry, performance is everything, but this year when the National Association for Insurance Agents held its annual meeting, one thing was different.

EXTRACT: Ladies and gentlemen, John Smith.

DEBBIE WHITMONT: To all the talk of motivation and success, speakers were adding a new word, and the new word was `ethics'.

JOHN SMITH: Don't you hate doing something when you feel like you're screwing someone? Don't you hate doing something when you think they think you're screwing them? Ethics are at the heart of this, my friends.

DEBBIE WHITMONT: There are 16,000 life insurance agents in Australia, and they're all under pressure. Neither they nor their companies want outside control or independent regulation and, most of all, the industry is fighting hard to keep the size of their commissions a secret.

JOHN SMITH: ...that the problem is we've confused the means and the ends.

LOUISE SYLVAN: There are a great many problems with agents, in fact, it's at that point of sale that I think most of the abuses are occurring. In other countries, for example the United Kingdom, there has been an insistence on what is called a `polarisation'; that means, that anyone who is actually getting a commission from an insurance company must not only disclose that commission, but disclose their relationship to that company or companies. Because we don't have these rules of polarisation in Australia and nor do we have proper disclosure requirements, what agents do is sell you the product that makes them the most money.

DEBBIE WHITMONT: The Life Insurance Federation is the industry body leading the fight against regulation.

DAVID PURCHASE: We're in the people business and people do the wrong thing from time to time, and agents do the wrong thing from time to time, but my concern is that the criticism of agents at the moment is well over the top, well over the top. Widespread criticism in the media is creating an impression that most agents are rogue agents and, in fact, that's not the case. We would be lucky if we had one or two per cent rogue agents. The great majority - 98, 99 per cent of them - do the right thing.

DEBBIE WHITMONT: But isn't it the case that some of these rogue agents have, in fact, been the biggest producing agents for some of the companies?

DAVID PURCHASE: Yes, some of them have been fairly big producers; that's correct.

DEBBIE WHITMONT: So how do you guarantee that the rogues will be controlled?

DAVID PURCHASE: Well, I think that .. I think that a great deal of work is, and consideration is being put in at the moment, to address some of these issues of that minority.

DEBBIE WHITMONT: At the annual conference, the agents say things are already changing. Late last year, agents and companies agreed to show consumers the overall effect of fees and charges on their investment policies, but the information is often buried inside other complex calculations, and the agreement to show it is only voluntary. Industry leaders say they're doing all that's needed. They say we should trust them to make their own rules and to enforce them.

GIL HOSKINS: There are guidelines. There are promotional guidelines that now have to be provided at the point of sale. So, you have the training of the agent; you have in our case agents controlled by sales managers who look at what they sell; you have promotional guidelines that have to be used at the point of sale; you have company prepared material with disclaimers and, you know, pointers. So, we regard ourselves as actively dealing with this issue in a multiple way which we think we ought to be given significant credit for.

ANDREW FERGUSON: They can present an image that they are trying to control it, but in reality, I mean, how do you control an agent when he's out in the field? I mean, how .. do you have someone from a government agency standing behind him recording or listening to everything he's saying. You can't do it.

DEBBIE WHITMONT: The insurance companies say this is part of the answer.

EXTRACT: Good afternoon, Life Insurance Federation, can I help you?

DEBBIE WHITMONT: Twelve months ago, the life companies set up their own complaints system. Although it's had very little publicity, it's already received 6,000 inquiries. The industry argues it can solve its own problems, but some would like to see an independent ombudsman.

EXTRACT: If you give me that information, I'll be able to investigate the complaint for you.

LOUISE SYLVAN: The particular problem with these complaints is that the consumer has to go through the company and then the industry body before they have a chance to go to any sort of independent panel. And all that time, through that conciliation, they have never been able to access any independent advice.

DAVID PURCHASE: Well, I would reject that because I think that, as I said before, we are operating a fair and impartial system, and we have three parts to our system. Firstly, there's the company level. If you've got a problem that you can't .. if you've got a problem or a complaint then you go to your company and see if you can get it resolved there. If you can't get satisfaction there, then you can come to the life conciliation service, and we will work with the policy holder and the company to try and effect a resolution of that problem, and at that stage we are fair, impartial and, indeed, I would say independent.

DEBBIE WHITMONT: But you are funded by the life offices.

DAVID PURCHASE: We certainly are, but, again, I would reject that that funding makes us less than fair or impartial.

DEBBIE WHITMONT: Whatever changes there may be in the future, it's policy holders who will pay the price for the past. It's their money that fuel the fees and commissions, their money that fired the push for sales. In the last two years, Colonial Mutual spent more than $100 million in agents' commissions; National Mutual nearly $400 million. The life insurance industry is telling us it's all in the past; unfortunately, it isn't.

Back in the factories, the life insurance companies and their agents are still hard at work. Only three weeks ago, just before Colonial Mutual terminated Tri-global, the Tri-global agents were still on the beat.

UNIDENTIFIED: I just sat down, he talked really fast, and it sounded really good, so I've gone `Yep, all right', and so he's just said `I need your name, your date of birth, your phone number, your address', and then .. so we did all that. And then he started forcing all these things at me, like sign this, sign that, and I've gone what are they for sort of thing, and just goes `No, no, it's cool. The only one you really need to know about is the one where I tell my boss that I've told you correctly of what's going on with the policy'. I said `Fair enough', and he's going `Quick, quick' .. no, I'm going `I've got to go, I got to go', and he goes `Well, quick, just quickly sign this and you can go', sort of thing. So that's what I did, and then I got back to my table and they told me it was wrong. But I didn't know, see, it just sounded so good and I've never had that happen to me before.

DEBBIE WHITMONT: How long did it all take?

UNIDENTIFIED: About 10 to 15 minutes.

DEBBIE WHITMONT: And that was it?

UNIDENTIFIED: Uh um.

UNIDENTIFIED: No, I said would I be able to take one of the leaflets home and show my dad and talk about it with him, and he said I couldn't take it home unless I signed for it. I signed up everything and that way I was joined. There's no way I could have taken it home without joining.

DEBBIE WHITMONT: So were you able to get any information without joining?

UNIDENTIFIED: No, nothing unless .. from what he told us that's it, at the table.

UNIDENTIFIED: He said all the information gets sent to you.

DEBBIE WHITMONT: After you've signed?

UNIDENTIFIED: Yes, after you've signed.

UNIDENTIFIED: Yes.

DEBBIE WHITMONT: Out on the Aboriginal communities, Colonial Mutual is easing its conscience. It's agreed to pay back everyone's money and to put more than $700,000 into a fund for Aboriginal education. When it comes to some of the poorest Australians, one of our biggest life insurance companies has finally agreed to play fair. The question is what will the big companies be doing for everyone else?

ANDREW OLLE: Debbie Whitmont reporting. And as I indicated at the head of the program this evening, CML's general manager, Ian Curry, is with me in the studio.

Mr Curry, are you ashamed for what CML did?

IAN CURRY: It is a matter of regret to us, Andrew, that Colonial Mutual has found itself involved in this way with the Trade Practices Commission and the events which have been outlined.

ANDREW OLLE: We've just seen a chronicle, haven't we, of callous exploitation at times? How did it happen?

IAN CURRY: Well, this is certainly not the way Colonial Mutual goes about its business.

ANDREW OLLE: Well, it is. We've just seen it going about its business.

IAN CURRY: It's not the way we recruit people; it's not the way train people; and it's certainly not the way we expect them to present our policies to the public.

ANDREW OLLE: Well, I'm sorry, we've just seen that you have recruited those people, those super sales people, the Tri-global people and the like, you actively went out and sought, didn't you?

IAN CURRY: Well, we've found out from this program and from the Trade Practices Commission that those things have happened. They're not the way we do business and we are taking all the steps we can, now, to correct that.

ANDREW OLLE: But where were your supervisors?

IAN CURRY: Well, that's part of the internal inquiry that we've been conducting as part of the Trade Practices Commission action, and we're taking the appropriate steps to make sure that that does not happen and that we do correct those events.

ANDREW OLLE: Can I put it to you that you couldn't have been totally ignorant of what was going on, that perhaps you were just happy to see them out there hustling up business?

IAN CURRY: No, that's not correct. We were not aware of the practices that have been alleged by the Trade Practices Commission. We certainly were aware of some administrative problems and that difficulties in premium remittances, but when we learnt about those practices, we moved very speedily to investigate and to take action.

ANDREW OLLE: Did you investigate the background of these super salesmen that you actively sought out? I mean, did you wonder about why they were so successful?

IAN CURRY: We certainly find out about anyone who wants to join Colonial Mutual. We pursue information from their previous employer, if that's the case, if they've been in the insurance industry.

ANDREW OLLE: Well, it looks like you fell down there too, doesn't it, because they did have a bit of a history, didn't they?

IAN CURRY: Well, we weren't aware of that. We did know that agents who came to us were successful in the terms that have been suggested, but we certainly took steps ourselves to make sure that they understood the way we do business, and that they should comply with our rules and condition.

ANDREW OLLE: Lloyd Ross, of course, says that you understood the way he did business. He reckons he told you everything that he was doing.

IAN CURRY: Well, I'm not in a position to comment on what Mr Ross has to say because his company and his directors have initiated legal action against Colonial Mutual for terminating their agency.

ANDREW OLLE: I think it could be fair to be said that you've only done the right thing now, because the Trade Practices Commission has leant on you, but are you genuinely contrite or is this just good PR?

IAN CURRY: No, it's a matter of deep regret to me and to Colonial Mutual that this has happened. Had we been aware of these actions, we would have taken our own steps sooner.

ANDREW OLLE: All right. Well is your conscience just for the Aboriginal victims of these sharp practices or does it go for the many non-Aboriginals because, as we've seen from Deborah Whitmont's report, the tactics were quite indiscriminate, weren't they?

IAN CURRY: Certainly, we are concerned for anyone who has a complaint about Colonial Mutual, any of the practices of our representatives, or any of our administrative procedures. We will certainly follow those through.

ANDREW OLLE: Does that mean refunds? Does that mean refunds in the same way that the Aboriginal people got?

IAN CURRY: Well, we will look at every situation on its merits. We will talk to the parties involved and we will make a judgment then as to what the circumstances are.

ANDREW OLLE: This could end up costing Colonial Mutual a lot of money, couldn't it?

IAN CURRY: Well, if that's required to fix this up, then that's what we're prepared to do.

ANDREW OLLE: How are you going to ensure that it won't continue?

IAN CURRY: Well, we're putting in place a compliance program that recognises the elements of the Trade Practices Act that are appropriate here. That's going to be done under strict supervision. It will require retraining; it will require stepped up supervision and management of all our representatives.

ANDREW OLLE: Yes, but this is happening only two weeks ago, as we just saw on the film.

IAN CURRY: Well, I'm not aware of that.

ANDREW OLLE: I mean, you've been looking at this for some time. You are now - forgive me - I mean, we just showed it on the film.

IAN CURRY: Yes, well, I've seen that tonight. Certainly, though, it was only in December that the Trades Practices Commission made us aware of the circumstances that they were taking action, and in the four months since then, we've worked very closely with them. They've recognised that as being a positive response, and with their support we are now putting in place a corrective program.

ANDREW OLLE: Isn't the whole problem, though, the system, in fact, of using agents to sell on commission? They get up front payments; therefore, there's no encouragement for them to have an ongoing interest in the customer's welfare?

IAN CURRY: Well, that's not correct because all agents understand that if they wish to build a career in our industry, it's in their interest to service their customers over the lifetime of a contract. The commission they get, whether it's up front or whether it's spread, is meant to cover the ongoing service, and every product that does require to be sold face-to-face - it doesn't matter what product people are looking at - you do need to talk to someone.

ANDREW OLLE: Employing agents, though, rather than having people on staff, I suppose, does allow you to distance yourself from any dirty work, doesn't it?

IAN CURRY: Not at all, because life companies are totally responsible for everything their agents do. Under the Agents and Brokers Act, whether we know that they're doing it or not, we are liable.

ANDREW OLLE: All right. Ian Curry, we'll leave it there. Thank you very much for coming into the studio tonight. And I should point out just briefly that, in fact, there were a couple of other insurance companies also active in this area. CML certainly was not alone. The AMP, although not working on the same scale, has recently refunded some money to Aboriginal communities, and Norwich Union is currently negotiating similarly with the Trade Practices Commission.