Financial companies have been preying on aboriginal people with poor financial literacy, a banking royal commission heard on Tuesday.
In a commission hearing held in Darwin, it was suggested that aboriginal people are routinely targeted with useless insurance, dud cars, and high-interest loans, with Clear View Life Assurance, in particular, allegedly signing up customers without their consent.
Nathan Boyle, an analyst at the Australian Securities and Investments Commission (ASIC), said many residents would engage in “gratuitous concurrence” in which they said “yes” even when they did not truly agree with propositions, AAP reported.
Phone calls involving ClearView and aboriginal clients were probed by the corporate watchdog after complaints of misconduct led to the financial firm 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’,” 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, OK?’ And they provided the details and ended up being signed up to policies they never intended being signed up for.”
Rowena Orr QC, senior counsel assisting the inquiry, said indigenous people often suffered “financial exclusion” and “poorer economic, social, and health outcomes,” as quoted by AAP.
Indigenous people fall prey to high-interest loans and useless insurance, as car dealers take advantage of their need for a car in remote communities.
“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,” said Lynda Edwards of Financial Counselling Australia. “Usually these cars then break down within a couple of weeks... the cars never get fixed.”
The hearing heard that aboriginal and Torres Strait Islander people in remote communities sometimes had a very limited understanding of banking products.
In one case, ASIC found that aboriginal people were being charged the maximum legally-allowed interest of 48% under a car loan, Boyle said in the AAP report.