ASIC’s Consultation Paper 317 details ASIC’s proposal to ban unsolicited telephone sales of life insurance (including funeral insurance) and CCI by insurers and Australian financial services (AFS) licensees who sell such insurance with general advice or no advice.
In ASIC’s view, selling products as complex as life insurance or CCI through unsolicited contact, with only general advice or no advice being given, is not conducive to consumers making informed decisions.
Unsolicited sales of insurance occur where contact is initiated by an insurer or distributor to sell insurance and the consumer has not requested contact for this purpose.
Unsolicited sales (also known as “hawking”) are prohibited under section 992A of the Corporations Act. They may include telephone calls, door-to-door sales, or being approached by sales agents in a public place such as shopping centres.
Examples of unsolicited sales can include contacting consumers whose details have been acquired through:
(a) online lead generation, including where consumers take part in lifestyle surveys or competitions, click on sponsored content, sign up to newsletters or provide their details to access information;
(b) telemarketing; or
(c) an existing relationship with the brand or provider.
In February 2019, the Financial Services Royal Commission recommended that the hawking of insurance and superannuation products should be prohibited and a legislated definition of ‘unsolicited’ should be introduced.
The Government responded to this recommendation by committing to strengthen and clarify the prohibition on hawking in section 992A, including by defining ‘unsolicited’.
In the meantime, ASIC’s proposed ban will provide interim protections to consumers ahead of broader law reform by the Government, and ASIC will continue to administer the hawking provisions on the basis of its regulatory guidance in Regulatory Guide 38 The Hawking Provisions (RG 38).
ASIC proposes to finalise the ban by March 2020.
ASIC says that once the ban is implemented, it will monitor compliance and take enforcement action as necessary if insurers or distributors do not comply. ASIC also intends to review its guidance in RG 38 later this year.