GE Money in trouble with ASIC

The GE Money Group has had conditions imposed on the Australian Financial Services Licence of two of its subsidiaries over the provision of insurance advice and has entered into an enforceable undertaking over debt collection practices.

The Australian Securities and Investments Commission (ASIC) said it imposed the licence conditions on GE Money’s Hallmark General Insurance Company and Hallmark Life Insurance Company after those companies failed to comply with commitments given within an enforceable undertaking in 2006.

ASIC found parts of the insurance advice and sales business were often poorly managed and did not meet the legal obligation requiring that there be a reasonable basis for personal advice given to customers.

The regulator said it was specifically concerned that staff were selling insurance to customers whose needs had not been identified or understood.

ASIC said that given the Hallmark companies had not complied with a number of key undertakings given in 2006, it had decided the best way to protect consumers was to impose conditions on the licences of GE Money’s Hallmark companies.

It said these more stringent conditions replaced the 2006 enforceable undertaking.

ASIC said that separate to the additional licence conditions on the Hallmark companies, GE Money had entered into an enforceable undertaking to address ASIC’s concerns about debt collection practices in its consumer business.