$28 million of junk add-on insurance claims and counting… ASIC must act now to fix junk insurance
Consumer Action Law Centre, Financial Rights Legal Centre and WEstjustice have made a submission to the corporate regulator urging a crackdown on junk insurance sales in car yards.
The submission criticises delays in implementing proposed reforms and uses data and case studies to clearly demonstrate the harm people will continue to experience until the Australian Securities and Investments Commission (ASIC) intervenes in the sale of car yard junk insurance.
“I find it disappointing that, despite Parliament’s explicit intention that ASIC use its product intervention powers to prevent harm to Australians, we are still waiting for action,” said Gerard Brody, Consumer Action CEO.
“It’s been 10 months since ASIC’s Original Instrument was released for consultation—and 3 years since its Consultation Paper proposing reforms to how insurance is sold in car yards—and now ASIC has proposed further commencement delays.
“Even more concerning, ASIC has also proposed to water down specific protections in this latest version of the instrument.
“COVID-19 means people are feeling the pinch financially and have even less money to spare. ASIC can and should act right now to stop more Australians being caught up in this ongoing junk insurance scandal in car yards,” he said.
WEstjustice CEO Melissa Hardham noted that many clients from non-English speaking backgrounds were unaware they had purchased add-on insurance, or that it had no value: “We have clients who are struggling to afford their rent and car repayments at this difficult time. To make matters worse, they are attending our debt and financial counselling clinics and discovering that they have wasted their money on this junk insurance. Consumers need this product intervention before further harm is done, particularly in light of the impact of COVID-19,” she said.
Since 2016, Consumer Action’s free online tool, DemandaRefund.com has helped people generate 13,218 letters of demand for refunds totaling $28 million. Over $10.5 million relates to car dealership sales alone. This is in addition to ASIC securing more than $130 million in refunds to compensate consumers for losses caused by these practices.
Not a single user of DemandaRefund.com said they would buy the same add-on insurance or warranty again.
A copy of the joint submission can be found here.
Media contact: Mark Pearce, Media and Communications Adviser | Consumer Action Law Centre | 0413 299 567 | email@example.com