ASIC's ban on cold call telephone sales of direct life insurance is welcome but needs to be broadened to apply to other forms of communication, according to law firm Maurice Blackburn.
The corporate regulator’s ban on unsolicited insurance telephone sales is scheduled to take effect from 13 January 2020.
Maurice Blackburn principal Josh Mennen said the Hayne royal commission revealed many people have been taken advantage of by unsolicited telephone calls from financial companies pushing unsuitable products.
“This is an important step by ASIC in faithfully implementing commissioner Hayne’s recommendations and will help protect the vulnerable members of our community from unscrupulous product spruiking by banks and insurers eager to sell their own in-house products,” Mr Mennen said.
“However, the hawking prohibitions apply only to unsolicited telephone calls and meetings, and do not apply to other unsolicited communications.”
Mr Mennen said more work needs to be done to address digital era communications, such as email spamming, brochures or digitally targeted media advertisements.
Further, he said there is also a need for more robust requirements on financial institutions to report to customers and the regulator as to how they obtain and use personal information.
“Banks and large wealth managers have systematically targeted existing customers through unsolicited approaches in an effort to cross-sell their insurance and other financial services,” he said.
“As shown by the royal commission, this has too often resulted in consumers, including many of our clients, taking out inappropriate or unnecessary cover at significant personal cost.
“Ridding the industry of this type of underhanded practice will be a key step in stopping the exploitation of people’s understandable desire to protect their financial future.”
CORRECTION: An earlier version of this article stated that "ASIC's ban on cold call telephone sales of life insurance is welcome...". This is incorrect. It was supposed to say "ASIC's ban on cold call telephone sales of direct life insurance is welcome..."
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