The Australian Securities and Investments Commission (ASIC) has released a series of recommendations to address issues it has uncovered within the consumer credit insurance (CCI) market.
ASIC conducted a review of 15 authorised deposit-taking institutions (ADIs), including banks, credit unions and building societies, following ompliance action that ASIC had taken against three companies that mis-sold CCI. In light of these specific investigations ASIC wanted to assess how CCI is sold across the industry more broadly.
“Our review revealed that some practices give rise to poor outcomes for consumers,” ASIC Commissioner, Peter Boxall, said.
In its review of sales practices ASIC identified the following risks:
- Consumers not being made aware that they have purchased CCI or that CCI is optional
- Consumers not being asked whether or not they wish to purchase CCI
- Consumers not being eligible to claim on all components of the CCI policy they have purchased
- The potential for consumers to be pressured or harassed by sales staff, and
- Consumers not understanding the cost or the duration of the CCI policy
“For consumers, the key message is that CCI is optional,” Dr Boxall said. “If a consumer is offered CCI they should consider whether or not they need it by asking key questions including ‘what would I be able to claim for’ and ‘what would the policy cost’.”
Following the review, ASIC has issued 10 recommendations relating to sales practices, disclosure, training programs and monitoring systems, which will be adopted by the ADIs.
