ASIC's crackdown on commissions continues

by Julia Corderoy15 Jul 2015
ASIC’s crackdown on commissions continues with a former insurance broker being permanently banned from providing financial services after the regulator found he was “motivated by his own potential gains”.

Abhinav Gupta, a former authorised representative of ACE Insurance was banned after ASIC found he was not of good character due to a range of dishonest conduct, motivated by the way he was remunerated.

Gupta was an authorised representative of ACE Insurance Limited (ACE) between October 2013 and May 2014, operating through ACE's Combined Insurance division in Victoria. During this time, he was responsible for selling accident and sickness insurance policies to the general public.

ASIC's investigation of Gupta's conduct found he issued a policy in the name of a client who never agreed to taking out the policy, used a client's bank account details on another client's policy application without authorisation, and issued at least 12 fictional policies in the names of clients that either did not exist or contained numerous fictional details in the policy applications – such as false employment details and non-existent bank accounts.

According to the regulator, Gupta was not remunerated by way of salary but received upfront and volume bonus commissions based upon policies sold, along with incentive prizes such as electronic devices and gift vouchers.

“Mr Gupta's actions were motivated by his own potential gains. For the protection of the public, ASIC will act to ensure dishonest insurance advisers are removed from the industry,” ASIC deputy chair, Peter Kell said.

Gupta's conduct was identified in the course of ASIC’s investigation into ACE and their Combined Insurance division. ASIC's investigation into ACE is ongoing.

In October 2014, an ASIC review of the life insurance industry found that more than a third (37%) of the advice consumers received failed to comply with regulation governing a consumer’s best interest. According to the regulator, commission and remuneration structures were largely the catalyst. The review found that high upfront commissions were more strongly correlated with non-compliant advice.

Since then, high up-front commissions for selling life insurance caught the attention of David Murray’s Financial Services Inquiry, which also said that these commissions can cause irresponsible behaviour.

Earlier this year, the Reserve Bank of Australia then warned banks over increasing broker commissions, saying it could create “significant amounts” of risky lending.


  • by Clarke Kent 15/07/2015 12:51:19 PM

    Hang on here this is Insurance!. And by the way clawbacks apply to their sales as well, in fact the clawback period now for new insurance policies in now been pushed out to 3 years!. This dude was a rogue let him pay the price for his crime not everyone else in the industry who are trying to make a bona fide income! Hands off commission levels ASIC (a tax funded government sheriff) :(

  • by SEQ Broker 16/07/2015 9:12:18 AM

    ASIC has no credibility with me any more. I met a potential customer who had been really done over by a major bank and he had documentary evidence to prove it. I got him in touch with ASIC and 2 years later still nothing. ASIC is a child with a magnifying glass and brokers are the ants. I bet if a broker had defrauded my customer and I reported it they would be all over that. Until ASIC stands up to the big 4 in a big way, they wont have any cred.