Misleading CommInsure ads may be a 'crime'

The Commonwealth Bank's insurance business may have committed a crime by running misleading ads, lawyers for the banking royal commission say.

CommInsure faced up to $8 million fines over the misleading ads but walked away with a $300,000 community benefit payment with the regulator's blessing.

Senior counsel assisting the commission Rowena Orr QC on Friday recommended misconduct findings against CommInsure over the web pages and brochures.

She said CommInsure may have made false and misleading representations in the its advertising and promotional material for trauma policies, in relation to cover for heart attacks.

That breach of financial services laws can be a civil or criminal offence.

The Australian Securities and Investments Commission did not take enforcement action against CommInsure for the misleading ads, run from 2013 to 2016.

ASIC and CommInsure reached an agreement for the insurer to make a $300,000 community benefit payment.

The advertising issue was connected to ASIC's investigation into the 2016 scandal over CommInsure using out-of-date medical definitions.

Financial services company ClearView may also face criminal charges for committing 300,000 offences by making unsolicited cold calls to sell life insurance, if the royal commission makes findings against it.

Ms Orr has recommended royal commissioner Kenneth Hayne QC make formal findings that ClearView breached anti-hawking laws between 300,000 and 303,000 times over a three-year period.

That means the ASX-listed company, which has admitted the breaches to the royal commission, could still face a criminal prosecution.

Ms Orr said ClearView also breached other financial services laws.

"ClearView's systemic failures in its sales processes meant that policyholders were frequently being sold policies in circumstances where ClearView was not behaving honestly and fairly," she said.

"ClearView sales agents were encouraged to sell aggressively, to sign up customers immediately, and to use other inappropriate methods of obtaining sales."

ClearView told the inquiry there was no indication from the Australian Securities and Investments Commission that it planned to recommend a criminal prosecution.

ClearView has stopped selling life insurance directly to consumers, after the regulator found it used unfair and high pressure sales practices to sell life insurance policies by phone.

It is refunding $1.5 million to 16,000 consumers over its direct sales practices, but the remediation is expected to ultimately cover 32,000 life insurance policies sold between 2014 and mid-2017.

Ms Orr also recommended misconduct findings against insurer TAL.

The inquiry heard TAL spent several years trying to find any way possible to stop paying a customer's insurance benefits, including paying a private investigator $20,000 to follow her for months.

Ms Orr said TAL had admitted it breached its duty of utmost good faith towards the woman, breached professional standards and engaged in misleading conduct.

The inappropriate conduct included the engagement of and inappropriate use of and instructions to external investigators, the excessive use of surveillance and bullying tactics.

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