A coalition of major consumer groups has warned the Government against allowing any loopholes or carve-outs within new legislation enacted in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The coalition of groups which included Choice, Super Consumers Australia, the Consumer Action Law Centre, Financial Counselling Australia, and the Financial Rights Legal Centre said it was supportive of legislative measures outlined by the Treasurer, Josh Frydenberg, but only if any loopholes or exemptions were removed.
And the group took particular aim at insurers, particularly those offering add-on insurance and life insurers who sought to avoid contracts.
Commenting on the situation, Choice chief executive, Alan Kirkland said a pivotal moment had been reached in implementing the vision of the Royal Commissioner, Kenneth Hayne.
“If passed without loopholes or carve-outs, these laws will be an important step towards embedding greater fairness in the system, ensuring that the financial wellbeing of customers is truly prioritised,” he said.
At the same time, Consumer Action Law Centre chief executive, Gerard Brody said that no longer would insurers and their retailing partners be able to flog junk insurance through harmful unsolicited and add-on sales practices.
“The desire of large companies to continue cross-selling insurance to their marketing lists isn’t a basis for an exemption from these critical reforms,” Brody said.
“ASIC's new powers means the regulator will now have the power to ensure people who have been ripped off are effectively compensated, which is a long overdue and much-needed reform.”
“Reform of insurance regulation is long overdue. From shifting the onus back on to insurers to ask policyholders the right disclosure questions and limiting life insurers’ ability to avoid contracts, to regulating the sale of junk insurance products and ending the damage wrought by unsolicited selling, the time has come for the insurance sector to clean up its act,” Financial Rights chief executive, Karen Cox said.
“These reforms will protect people from having their retirement savings eaten away by ‘fees for no service’,” director of Super Consumers Australia, Xavier O’Halloran said.
“If passed, stronger laws will also empower ASIC and APRA to stamp out unfair behaviour by superannuation funds.”