ASIC has announced the implementation of a ban on unsolicited ‘cold call’ telephone sales of direct life insurance and consumer credit insurance (CCI). The ban will address poor sales practices that have led to unfair consumer outcomes and will take effect from 13 January 2020.
In announcing the ban, ASIC Commissioner Sean Hughes said, “ASIC will intervene to stop practices that lead to poor consumer outcomes and destroy trust in the financial system. This action draws a clear line in the sand. From January firms will no longer be able to call consumers out of the blue and use sophisticated sales tactics to pressure people into buying life insurance and CCI products.”
The ban is consistent with recommendations made by the Financial Services Royal Commission and provides protections to consumers that complement broader legislative reform by the Government. Prior to this ban, firms could engage in unsolicited telephone calls if certain requirements were met, for example calling the consumer during prescribed hours and giving them the option of having information from the Product Disclosure Statement read out prior to making an offer.
In July 2019, ASIC consulted on the ban and sought feedback from insurers and Australian financial services (AFS) licensees via a consultation paper titled Unsolicited telephone sales of direct life insurance and consumer credit insurance.
ASIC has also updated guidance in Regulatory Guide 38 The hawking provisions to reflect the ban.