A leading law firm has warned that ASIC is focusing on mis-selling add-on insurance.
Gadens Lawyers has pointed to an investigation ASIC conducted into the sale of add-on insurance. While the regulator's investigation focused on car finance, Gadens said the principles "are likely to apply to all consumer insurance cross sales".
"ASIC’s preliminary investigation identified that consumers often feel pressured when sold add on insurance. Consumers were also being mis-sold insurance products that excluded or limited substantial numbers of situations and amounts of coverage," the law firm said.
Gadens said the ASIC investigation had uncovered unscrupulous sales techniques.
"ASIC claimed that frequently tactics such as stringing out the sales process, making the consumer feel obliged, heavy sales tactics, and bombarding the consumer with paperwork have been used in the vehicle industry to sell ad on insurance. The products are not necessarily suitable for the individual consumer’s needs."
Gadens warned that licensees should have up-front discussions with borrowers about insurance, conduct due dilligence about the products they promote and understand the limitations and exclusions of said products.
"Pressure selling, harassment, or coercion tactics are never acceptable with respect to credit and financial products," Gadens said.