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.
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.”