Submission: Inquiry into credit and financial services targeted at Australians at risk of financial hardship

ASIC’s proposed ban on outbound phone sales of life, funeral and consumer credit insurance
Australian Securities and Investments Commission - Consultation Paper 317, Unsolicited telephone sales of direct life and consumer credit insurance

Unsolicited selling is an outdated and abusive practice with a significant risk of mis-selling people products they don’t want, need or understand.

Financial Rights Legal Centre and Consumer Action Law Centre made a submission to ASIC Consultation Paper 317: Unsolicited telephone sales of direct life and consumer credit insurance.

We strongly support ASIC’s proposed interim ban on unsolicited outbound phone sales of consumer credit insurance, accidental death and injury, and funeral insurance.

During the Hayne Royal Commission, we heard accounts of insurers using cold-calling to pedal poorly designed, low value insurance policies to vulnerable people and those who can’t afford it.

The Royal Commission Final Report recommended a simple and clear ban on the unsolicited selling of all insurance (Recommendation 4.1). ASIC’s proposed interim ban an essential stop-gap to provide some protection to insurance consumers until this broader recommendation is legislated by Government.

The harm caused by unsolicited selling is not unique to insurance. Consumer Action has seen people suffer severe financial harm as a result of the finance sold with products which are sold through cold-calling and unsolicited meetings. These products include timeshare schemes and products sold door-to-door, such as solar panels sold with unregulated credit. We also regularly hear complaints about unsolicited sales of consumer leases, particularly among Aboriginal and Torres Strait Islander communities. We do not see unsolicited sales deliver benefits to consumers. Generally, the products sold are expensive and poor value, and frequently sold to people who cannot afford them.

It is clear that we need an economy-wide ban on unsolicited selling.

You can read the full submission here [PDF].

 

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