The Australian Securities and Investments Commission (ASIC) has proposed a ban on cold calls for sales of life insurance.
ASIC is inviting feedback on the cold calls for insurance ban through a consultation paper. Its aim is to put an end to the sale of complex insurance products which customers do not understand, want, or need.
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A ban on cold calling in Australia was proposed by the Royal Commission into misconduct in banking.
The Royal Commission recommended that the law should be changed to clearly prohibit unsolicited sales of superannuation and insurance products. The Government has committed to implement this recommendation – in the meantime, ASIC’s ban will protect consumers where we have identified ongoing sales issues and have evidence of consumer harm.
It also follows an announcement from ASIC in August 2018 that said it would restrict unsolicited sales of direct life insurance. The body found a link between outbound sales calls and sales conduct issues.
ASIC Commissioner Sean Hughes said: “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.’
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By GlobalData“Such a ban is consistent with the Financial Services Royal Commission recommendations, and will provide consumers with further protections from mis-selling practices now, ahead of wider law reform by Government. 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.”
The consultation is open for a period of six weeks, with submissions due by 29 August 2019.
ASIC has taken action against a number of firms before after identifying mis-selling or inappropriate conduct in the sale of direct life insurance:
- ClearView refunded over $1.5m to 16,000 customers after pressuring them to buy life insurance over the phone;
- Latitude Insurance provided refunds of approximately $1.1m to 905 customers after it mis-sold consumer credit insurance (CCI) with Latitude personal loans and incorrectly denied claims on CCI policies sold with Latitude and other credit cards (17-457MR), and
- Commonwealth Bank has also refunded over $10 million for mis-sold consumer credit insurance (17-268MR).
