Consumer groups have criticised an anti-hawking regulatory guide for highlighting the sale of travel insurance through an agent as an exemption.

Travel cover has already been excluded from the deferred sales model for add-on insurance and consumer groups say the Australian Securities and Investments Commission (ASIC) hawking guide is further undermining protections proposed by the Hayne royal commission.

“Despite thousands of Australians complaining about their travel insurer during COVID-19, the Federal Treasurer is giving travel insurance special treatment: an unwarranted exemption from Commissioner Hayne’s sensible reforms that would stop pressure sales of junk insurance,” Consumer Action CEO Gerard Brody said.

The consumer groups point to research that finds the risk of under-insurance in travel can be caused by the purchase of products with exclusions, a problem associated with unsolicited sales.

The regulatory guide example includes a consumer, Kasia, being offered cover when visiting a travel agent to arrange an overseas holiday, suggesting the insurance product would be so closely related to the purchase of flights that the consumer would have expected to be offered that form of insurance.

Consumer groups say they have not seen any research suggesting people expect to be sold insurance when purchasing a flight or holiday package, and people can still take out cover online or over the phone on the same day, if needed. They call for the example to be removed from the guide.

“Insurance, a financial risk product, is a fundamentally different product to an overseas holiday,” the submission says.

ASIC released its consultation paper last month on the draft hawking reforms regulation guide. The final version is due to be released next month, with the reforms set to take effect from October 5.

The consumers submission was supported by the Consumer Action Law Centre, Financial Rights Legal Centre, Financial Counselling Australia and Super Consumers Australia.