The Australian Securities and Investments Commission (ASIC) has moved to provide further guidance for banks, credit unions and building societies offering consumer credit insurance (CCI) to improve their practices and reduce the risk of miss-selling.
The regulator has issued 10 recommendations covering the areas of sales practices, disclosure, training and monitoring systems, after reviewing the practices of 15 authorised deposit-taking institutions.
ASIC noted that its decision to issue the 10 recommendations had followed compliance action it had taken against three companies which had miss-sold consumer credit insurance.
Commenting on the move, ASIC commissioner Peter Boxall said the regulator’s review of sales practices had identified a number of risks including that consumers were not being made aware they had purchased the insurance and were not even being asked whether they wished to make such a purchase.
As well, Boxall listed the potential for consumers to be pressured or harassed by sales staff, and for consumers not to understand the cost or duration of a CCI policy.
"For consumers, the key message is that CCI is optional," Boxall said. "If a consumer is offered CCI they should consider whether or not they need it by asking key questions including ‘what would I be able to claim’ and ‘what would the policy cost’."
