Could ASIC bring an end to insurance telemarketing?
Written on the 18 July 2019 by Paris Faint
We all know the drill. You sit down to a nice dinner, wine in hand, ready to relax and then the phone rings.
But who might be on the other end? Somebody trying to flog life insurance, of course.
It's a moment we all loathe, but if ASIC gets its way that moment may end up becoming a thing of the past.
The corporate watchdog is currently inviting feedback on its proposal to ban unsolicited telephone sales of direct life insurance and consumer credit insurance.
The rationale behind its decision is to prevent the sale of complex insurance products which buyers simply don't want, need or understand.
ASIC Commissioner Sean Hughes says the proposal, if accepted, would be consistent with recommendations to come out of the Financial Services Royal Commission.
The Royal Commission recommended that the law should be changed to clearly prohibit unsolicited sales of superannuation and insurance products, a recommendation that the Government is also backing.
"ASIC will step in to stop practices that lead to poor consumer outcomes and destroy trust in the system," says Hughes.
"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.
"Such a ban is consistent with the Financial Services Royal Commission recommendations and will provide consumers with further protections from misselling practices now, ahead of wider law reform by Government."
If the ban doesn't end up going ahead, Hughes says ASIC is concerned that consumers will "continue to be preyed upon" by peddlers of inappropriate products who use unconscionable sales tactics.
Earlier this month, ASIC released a report titled 'Consumer credit insurance (CCI): Poor value products and harmful sales practices' which found that the design and sale of CCI had consistently failed consumers.
The review found that telephone sales practices were harmful when consumers were still sold CCI despite the fact they were ineligible to claim under the policy and sales staff used high pressure sales tactics to secure deals.
ASIC detailed similar issues in a separate report called 'The sale of direct life insurance'.
This review found some firms engaging in sales conduct that created risks of consumers buying products they did not want, could not afford or that did not meet their needs.
A link was identified between poor sales conduct and outbound sales calls.
Before ASIC makes its final decision regarding the ban, it is testing the waters and calling for feedback on the subject.
The consultation paper can be found on the ASIC website.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Paris Faint