*Article Updated 18 July, 2019, 12:22pm
No more unsolicited calls for the direct sales life insurance industry.
This week saw the release of consultation paper, CP 317 Unsolicited telephone sales of direct life insurance and consumer credit, inviting feedback from industry about the ban on unsolicited sales calls for direct insurance and consumer credit.
This comes after the corporate regulator released a paper last week looking at harmful sales practices in consumer credit insurance.
“ASIC will step in to stop practices that lead to poor consumer outcomes and destroy trust in the system. It is only fair that consumers have a proper opportunity to consider which insurance product best meets their needs and then compare alternative products, without feeling pressured to make a purchase,” ASIC Commissioner Sean Hughes said, in a formal statement.
Hughes added that this move is consistent with recommendations from the Royal Commission into Banking, Superannuation and Financial Services that revealed unethical sales practices.
The Commissioner’s comment is in reference to Recommendation 4.1 that calls for no hawking of insurance.
“Without such a ban, we are concerned that consumers will continue to be preyed-upon by peddlers of inappropriate insurance products, using pressure sales tactics.”
Hughes’ statement relates to the wider push to improve industry sales’ practices, with a review into the Regulatory Guide in the Hawking Provisions also on the cards.
The consultation paper has been welcomed by the Financial Rights Director of Casework, Alexandra Kelly.
“This dodgy business model’s time is up,” Kelly said. “Unsolicited direct life insurers and their associated partners are the ‘used car salesmen’ of the insurance industry.”
Kelly added that:
ASIC and the Banking Royal Commission have collected a mountain of evidence to demonstrate that the business model is the cause of enormous harm to consumers. We look forward to ASIC implementing this ban sooner rather than later to stop any further exploitation through the use of these dodgy tactics.