ASIC has announced that it is inviting feedback on a proposal to ban unsolicited telephone sales of direct life insurance and consumer credit insurance.
According to the commission, such a ban would prevent over-the-phone sales of complex insurance products which consumers do not need, want or understand.
It comes after ASIC identified unfair sales practices it said were consistently failing consumers and ultimately recommended the ban on unsolicited phone sales of consumer credit insurance earlier this month, and follows an August 2018 announcement that unsolicited sales of direct life insurance would be restricted.
The commission said it had previously found a link between outbound sales calls and sales conduct issues that included pressure selling.
Commenting on the proposed ban, ASIC commissioner Sean Hughes outlined that “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,” he explained.
Noting such a ban as consistent with the financial services royal commission recommendations, Mr Hughes said it 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,” he continued.
ASIC said that once a ban is implemented, it will monitor compliance and take enforcement action as necessary if insurers and distributors don’t comply.
Grace Ormsby is a journalist for Momentum Media's Nest Egg.
Before moving into the finance realm, Grace worked on Nest Egg's sister site Lawyers Weekly, and was previously a staff reporter at the NSW Business Chamber.
She holds a Bachelor of Communication (Journalism), a Bachelor of Laws (Hons) and a Diploma of Legal Practice from the University of Newcastle.