The Australian Securities and Investments Commission (ASIC) has welcomed a Productivity Commission proposal that may extend a deferred sales model to all add-on insurance.

ASIC is consulting on a sales process that gives consumers extra time to decide about add-on products promoted at vehicle dealerships, to prevent pressure purchases of unsuitable cover.

The Productivity Commission draft report on financial system competition says ASIC should proceed with the proposal as soon as possible and a Treasury working group should consider extending the model to all add-on insurance.

“We support the Productivity Commission’s findings on add-on insurance, particularly the recognition of poor consumer outcomes across the sector,” ASIC says.

“We think it may be useful to extend the deferred sales model to all add-on products.”

ASIC plans to consult further on the vehicle dealership model and enhanced supervision obligations in the first half of this year.

The regulator also says a recommendation to rename “general advice” is potentially useful, but there are wider issues to consider around advice access and quality of information.

In a submission to the Productivity Commission, the Australian Prudential Regulation Authority (APRA) says it will work more closely with the competition watchdog on financial services.

The creation of a Financial Services Unit within the Australian Competition and Consumer Commission (ACCC) has opened the door to a closer relationship after previous limited engagement, APRA says.

“APRA and the ACCC are pursuing opportunities to strengthen the operational connections between the two agencies at all levels,” it says.

The Productivity Commission draft report says competition issues have at times taken a back seat to the focus on financial system stability. But APRA says the global financial crisis highlighted the wider public benefits from regulating for resilience.

“Over the long term, financially sound competitors within a stable financial system are central to competitive and efficient financial services markets, and the benefits that they deliver to the community more broadly,” it says.