Could ASIC bring an end to insurance telemarketing?

Could ASIC bring an end to insurance telemarketing?

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

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Looking for a credit or charge card that’s built for your business? Try American Express
Partner Content
A good credit card should work for you, not against you, and let you and your business ...
American Express
Advertisement

Related Stories

Devine abandons Alba to upsize at Burleigh Heads with $400m Burly tower

Devine abandons Alba to upsize at Burleigh Heads with $400m Burly tower

In a sign that the heat has yet to come out of the Gold Coast prope...

Mandatory COVID isolation to end nationally mid-October

Mandatory COVID isolation to end nationally mid-October

National Cabinet has today determined that mandatory isolation peri...

Bottoms up: Sydney cold brew coffee liqueur brand Mr Black acquired by beverage giant Diageo

Bottoms up: Sydney cold brew coffee liqueur brand Mr Black acquired by beverage giant Diageo

Fast-growing coffee liqueur brand Mr Black is joining a portfo...

Sunset on the horizon in 2023 for developer Sunland

Sunset on the horizon in 2023 for developer Sunland

A developer behind some of the Gold Coast's most iconic buildin...