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ASIC seeks feedback on add-on reforms

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The Australian Securities and Investments Commission (ASIC) has opened a consultation over a proposal to apply its product intervention power to add-on products sold through car yards.

It wants feedback on plans for a deferred sales model, the extra obligations attached to the sales scheme and proposed measures to monitor the impact of the changes.

“This consultation paper highlights our concerns that the sale of add-on insurance products and warranties in the car yard distribution channel has, and is continuing to result in, significant detriment to retail consumers, including causing financial losses,” ASIC says.

“The product intervention power is a proactive way for ASIC to intervene where a product has resulted, will result or is likely to result in significant consumer detriment.”

ASIC expects to decide by early next year whether to exercise its power.

The product intervention power came into effect in April with new design and distribution obligations, which would not apply until April 2021.

The Consumer Action Law Centre says the measures ASIC has proposed will do little to improve consumer protection.

“Put plainly, add-on insurance sold in car yards is junk,” CEO Gerard Brody said.

“We strongly support ASIC intervening in sale of insurance by car dealers. But the proposed deferred sales model won’t go far enough towards protecting Australians.”

The law centre has suggested a 30-day deferral period be applied to add-on sales.

Closing date for submissions to the ASIC consultation is November 12.

For more information, click here.