The Australian Securities and Investments Commission (ASIC) has vowed to act against inappropriate sales of add-on insurance products, amid growing concerns of consumers being misled.

“It’s time to get your houses in order,” Deputy Chairman Peter Kell told last week’s Insurance Council of Australia annual forum. “To be blunt, progress in improving practices and standards in this area has not been good enough.

“We would prefer constructive solutions, but if ASIC has to take increasing amounts of enforcement action to remove the blind spot around mis-selling of these types of products, we will do so.”

The regulator’s review of general insurance policies sold at car dealerships produced alarming evidence that many consumers had no idea what they had bought.

In some cases consumers were unaware they were being billed commission rates of up to 70%, while insurers were unaware products were issued in their names.

Mr Kell says the industry must change its nonchalant attitude towards third-party sales of such products, or face tougher ASIC action.

“Our work, which is identifying systemically poor outcomes for consumers, is demonstrating this attitude carries the risk of significant reputational damage,” he said.

“There has appeared to be an attitude that ‘it’s someone else’s problem’. We have taken regulatory action, so if we have to focus on add-on products in this forum next year it is likely to involve a stronger focus on enforcement.”

In a recent case involving The Cash Store, the Federal Court imposed a penalty of almost $19 million on the payday lender for inappropriate sales of consumer credit insurance that was deemed useless.

“It is important that insurance products are not distributed in a way that results in sales to consumers who do not need or understand the product,” Mr Kell said.

“All parts of the industry have to accept responsibility for improving standards and consumer outcomes.”