An Australian Securities and Investments Commission (ASIC) consultation paper, released today, proposes a ban on unsolicited telephone sales of direct life insurance and consumer credit insurance (CCI). Consumer Action Law Centre (Consumer Action) has heralded the proposal as a win for all Australians.
“Consumer Credit Insurance and direct life insurance have become exploitative cash cows for the insurance industry” said Consumer Action Law Centre CEO Gerard Brody. “What’s worse is when people are being cold-called and pressured into buying junk insurance that they never wanted and don’t need. It’s unethical, it’s wrong and it’s gone on for too long.”
Consumer Action welcomes the proposed ASIC ban that will prevent these complex products being forced onto unsuspecting people. There is a clear link between unsolicited selling and people being pressured into unsuitable or junk insurance. Unsolicited selling can occur when contact details are obtained through surveys and competitions, clicking on sponsored content, telemarketing, or an existing relationship with the lender or insurer.
“People are being preyed upon by telemarketers who want to force the sale of these worthless or unsuitable products onto us, often targeting vulnerable Australians and causing significant consumer harm.
“A blanket ban on cold calling and unsolicited selling across all products and services is desperately needed to stop people being exploited. Banning cold calling of insurance is a good start,” Mr Brody said.
The Financial Services Royal Commission exposed the significant harm that high pressure selling can cause. One witness from Victoria, Grant Stewart, gave evidence in relation to a life insurer pressure-selling insurance to his son, who has a disability.
“Many remember the harrowing stories of harm told during the Royal Commission. One such story was that of Grant Stewart, whose disabled son was cold-called and sold life insurance. This caused significant distress for the family as they tried to cancel the worthless policy” Mr Brody said.
“A ban on cold-calling of insurance was a much-needed recommendation of the Royal Commission and we welcome the swift action by ASIC.”