Law firm warns licensees on dodgy insurance cross-sell tactics

by Adam Smith22 Oct 2014
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.

COMMENTS

  • by Tom 22/10/2014 9:26:05 AM

    Is this the same ASIC that ultimately strong arms brokers into the insurance add-on arena courtesy of our responsibilities under the NCCP?

    Then, if I'm reading this correctly, the line in this space has become so fine that we're damned if we do, and damned if we don't!

    Nice one ASIC, you must be having one hell of a lot of trouble justifying your existence!

  • by Chappo 22/10/2014 9:42:41 AM

    "The regulator's investigation focused on car finance". Nice to be lumped into the same bucket as car salesmen....

  • by Peter Heinrich 22/10/2014 10:54:55 AM

    The real pressure comes if something goes terribly wrong and the clients aren't insured. The clients then blame the broker that they weren't offered insurance in the first place. If the clients feel pressured they should be. Their best interest is served if they are shown what may happen if they aren't insured.