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Since 2016, Consumer Action’s free tool, DemandaRefund.com has helped people to generate over 9,000 demands totalling an estimated $17 million in refunds for junk consumer credit insurance (CCI), guaranteed asset protection (GAP) insurance and extended warranties sold by caryards, insurers, lenders and warranty providers. Of this, a minimum $6.8 million relates to the car dealership distribution channel, and likely much more.

In our joint response with Financial Rights Legal Centre (Financial Rights) to ASIC Consultation Paper 324: Product Intervention: The sale of add-on financial products through caryard intermediaries, October 2019 (CP324), we strongly support many elements of ASIC’s proposed intervention. A deferred sales model for add-on insurance, along with complementary obligations and a ban on certain mechanical risk products will dramatically reduce the ongoing, significant consumer detriment in this failed market.

We are, however, strongly opposed to ASIC’s proposal that the deferred sales period begins when a person makes an application for car finance. In most cases, the consumer will need to re-engage with the car dealer to accept delivery of the car, presenting another opportunity for a pressure-sale of junk insurance and warranties.

Without this change to ASIC’s model, pressure sales will remain – defeating the very purpose of this intervention.

The joint submission contains detailed data from DemandaRefund and makes 22 recommendations to improve ASIC’s proposed intervention.

Most damning of all, not a single DemandARefund.com user responded that they would have bought the insurance or warranty, knowing what they know now.

This a critical moment to fix and prevent any repetition of the widespread, systemic mis-selling of junk insurance and warranties through caryards. Put simply: insurance and warranties cannot be safely sold in caryards.

You can read the full submission here [PDF].

This submission was endorsed by the Consumer Credit Legal Service (WA) Inc on 7 January 2020.