ASIC proposes ban on direct telephone life sales

The Royal Commission and the recent closure of Freedom Insurance Group have had their corollary in a move by the Australian Securities and Investments Commission (ASIC) to propose a ban on unsolicited telephone sales of direct life insurance and consumer credit insurance.

The regulator announced today that such a ban would prevent the sale of complex insurance products which it said consumers did not need, want or understand.

ASIC said today it had opened a consultation process around its proposal to ban the unsolicited telephone sales model.

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Commenting on the move, ASIC commissioner, Sean Hughes said the regulator would step in to stop practices that led to poor consumer outcomes and destroyed 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 said.

“Such a ban is consistent with the Financial Services Royal Commission recommendations, and 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.”

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I've not had any insurance calls as such but get daily calls from many others including those dubious o/s boiler room joints selling crypto, equities trading platforms etc routing through Australian phone numbers. Pity they can't ban/stop those calls. Domestically, the do-not-call register is a monumental failure so I've resorted to not answering the phone unless the number is in my contact list. If its genuine they leave a message, if not, well sayonara. It is bloody annoying however having to turn your phone to silent to avoid the all hours calls.

Obviously this needs to be done. They should probably impose the Best Interests Duty on all Life Insurance sales. But they wont because companies like Real Insurance would cease to exist.

It still amazes me that backpackers with the first subject of the DFP can sell the same insurances (and be paid the same commissions) as university qualified financial advisers, however as these sales reps arent as knowledgable they are able to sell under General Advice, without the need for a fact find, SOA or the need to act in the Best Interests of their clients.

Dont get me started on mortgage brokers and car sales people etc selling their JUNK add on insurances without any training or compliance and still receiving commissions.

Cant we just have one set of rules, education standards and compliance process for everyone dealing with Life Insurance?

Couldn't agree more - how is it possible that a client walks away with a complex life insurance product, which has been compared to others through a software program on the back end, and it be deemed 'general advice'.

Spare me.

Its their ability to by pass the Best Interests Duty which is the worst. What is the point of having the BID if it is only applied to advisers who are the only ones who ever act in their clients best interests in the first place.

Imagine if Lawyers were held to this standard.

Let's hope this stops mortgage brokers selling personal insurances under the guise of 'general advice' e.g. no advice. The products they sell are more expensive and have worse terms than those products sold by financial planners. How ASIC allows thousand of mortgage brokers to be licensed as providing only general advice when they know they are selling complex insurance products is beyond me. Brokers call it loan protection but it is not just the loan they are selling insurances for. In the recent Australian Broker Awards, half of the Loan Protection of the Year finalists were mortgage brokers who don't hold any financial planning qualifications yet they are finalist for selling personal insurances. When you dig deeper most of those brokers are in breach of the Corporations Act because they promote they sell personal insurances on their websites or facebook pages. ASIC needs to get its act together here. It is allowing brokers to be 'fake' financial planners listed on their own ASIC website as authorised representatives...ASIC knows it is happening.

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