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ASIC has signalled it will apply greater scrutiny to brokers who sell add-on insurance, according to a legal firm that specialises in compliance.
The Fold, which specialises in legal and compliance issues for the financial services industry, said ASIC would also target other industries that offered add-on general or life insurance.
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Managing director Claire Wivell Plater said the regulator had made its intentions clear at its annual forum earlier in the year.
Ms Wivell Plater also said ASIC had spent considerable time looking at motor, consumer credit and travel insurance and had not been impressed.
“Many insurance products sold at the point of sale offer a convenient means of purchasing coverage, which in some cases is not readily available through conventional channels,” she said.
“Regulators are now using behavioural economics to analyse financial services selling practices – with alarming potential consequences for distributors of ancillary insurance and credit products.”
Ms Wivell Plater urged businesses to review their insurance offerings to ensure customers are being properly advised.
“If a sales process includes pre-ticked boxes, bundling of costs into another product, misrepresenting the need for cover, opaque selling practices or remuneration practices that encourage aggressive sales – that is, commissions and volume bonuses – advisers could be singled out [by ASIC] for special attention.”
