Scrutiny of add-on insurance products by consumers, regulators and government has increased recently, with a particular focus on the sale of consumer credit insurance (CCI). Insurers and third-party sellers have been criticised for offering poor-quality products, pressure selling and selling to consumers who were unaware they were consenting to purchase CCI.
In light of these concerns, the Customer Owned Banking Code Compliance Committee conducted an Own Motion Inquiry (inquiry) into the sale of CCI by Customer Owned Banking Code of Practice subscribers. The Committee’s aim was to establish whether and how Code subscribers sell CCI and other add-on insurance products, and to examine their compliance with related Code obligations in particular the obligation to ensure that add-on insurance products are useful, reliable and of value to consumers.
To assist Code subscribers, various Code compliance recommendations are included throughout the report, as well as the applicable recommendations from ASIC’s Report 256 on CCI for reference.
Compliance with the Code by subscribers in selling CCI will be reviewed by inclusion of relevant questions in the next ACS.