ASIC said in a statement that it is taking this action to address ongoing concerns about consumer harms from the sale of add-on insurance and warranty products by car yards.
ASIC’s product intervention power allows it to intervene where financial products have resulted in, or are likely to result in, significant consumer detriment, and allows the regulator to directly confront, and respond to, business models that cause, or create a risk of consumer detriment, in the financial sector.
In 2016, ASIC put out its Report 471: The sale of life insurance through car dealers: Taking consumers for a ride.
The report suggested that car yard life insurance is poor value for money and it can be much more expensive than other forms of life insurance.
Further, it found that car yard life insurance can be sold when it is not necessary, such as to young people with no dependants.
In announcing the consultation, ASIC commissioner Sean Hughes said there has been a history of unfair conduct and poor results for consumers in the add-on insurance market.
“We have seen policies sold to consumers when they have been ineligible to claim under them. ASIC has secured over $130 million in refunds to compensate consumers for their losses from these practices,” Mr Hughes said.
“As well as compensation for past conduct we are proposing changes to improve consumer outcomes in the future.”
Get rid of Mortgage brokers selling junk insurance without advice. How can a mortgage broker setup an insurance policy without investigating the clients current circumstances, without advice, and without an advice document? These policies have exclusions and poor coverage. ASIC have done nothing about this.
When are they going do this with Mortgage brokers selling personal insurances? Personal Insurances is complex area yet a third of brokers have an AR under an AFSL selling personal insurances under the guise of ‘general advice’ without having the proper qualifications and/or knowledge to do so…yet ASIC allows this to continue knowing full well it is not in the client’s best interest. Hopefully these new powers will see the end of brokers ‘adding on’ personal insurance when providing loan advice to their clients.