It’s such a widespread issue that the Australian Securities and Investment Commission has proposed to use its intervention powers to reform the sale of add-on financial products by car yards and protect consumers against costly add-ons.
Announcing the consultation, ASIC commissioner Sean Hughes said the opening up of a consultation period on the proposal for reform follows consumer concerns.
He said there had been a history of unfair conduct and poor results for consumers in the add-on insurance market.
Mr Hughes said ASIC has further questioned the validity of these products when consumers look to claim on such policies.
“We have seen policies sold to consumers when they have been ineligible to claim under them,” he commented.
As a result, ASIC has previously secured over $130 million in refunds to compensate consumers for their losses from these practices.
The product intervention power held by ASIC allows it to intervene where financial products have resulted in, or are likely to result in, significant consumer detriment.
As well as compensation for past conduct, the regulator said it will propose changes to improve consumer outcomes in the future.
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