GE Money faces compo payout for mis-selling
Last week’s crackdown on GE Money by the Australian Securities and Investments Commission (ASIC) highlights the importance of brokers, says NIBA CEO Noel Pettersen.
“Regardless of the business involved, as the cycle is moving into a period of change the need to use a competent intermediary to give appropriate advice is becoming more apparent,” Mr Pettersen told insuranceNEWS.com.au.
ASIC has slapped an enforceable undertaking on GE Money’s Hallmark general insurance and life divisions following GE Money’s failure to comply with a previous order issued two years ago.
The regulator alleges Hallmark was “selling insurance to customers whose needs had not been identified or understood” and has restricted its sales staff to giving “general advice” on insurance policies, rather than “personal advice”.
ASIC’s restrictions on Hallmark’s Australian financial services licences also require the consumer finance group to employ an independent expert to assess compensation arrangements for customers who have been mis-sold policies.
GE Money admits it sold customers inappropriate cover. “The level of cover provided, in some cases, may have exceeded the individual customer’s requirements,” the company said in a statement in which it accepted ASIC’s conditions.
Christopher Zinn, a spokesman for consumer advocacy group Choice, says selling standards have improved greatly in financial services but there are still isolated instances of poor practices. “Since the bad old days mis-selling has been really cleaned up but this proves it’s not entirely dead and buried,” he said.
Mr Pettersen says brokers’ advocacy role is crucial. “People who use insurance brokers continue to use them – and there is a clear reason for that,” he said. “Their role is to act on behalf of the insurance buyer.”
GE Money’s insurance division covers sickness and injury, life, credit card and car insurance. ASIC has also cracked down on GE Money’s debt collection practices, ordering the company to pay compensation to affected customers.
“Regardless of the business involved, as the cycle is moving into a period of change the need to use a competent intermediary to give appropriate advice is becoming more apparent,” Mr Pettersen told insuranceNEWS.com.au.
ASIC has slapped an enforceable undertaking on GE Money’s Hallmark general insurance and life divisions following GE Money’s failure to comply with a previous order issued two years ago.
The regulator alleges Hallmark was “selling insurance to customers whose needs had not been identified or understood” and has restricted its sales staff to giving “general advice” on insurance policies, rather than “personal advice”.
ASIC’s restrictions on Hallmark’s Australian financial services licences also require the consumer finance group to employ an independent expert to assess compensation arrangements for customers who have been mis-sold policies.
GE Money admits it sold customers inappropriate cover. “The level of cover provided, in some cases, may have exceeded the individual customer’s requirements,” the company said in a statement in which it accepted ASIC’s conditions.
Christopher Zinn, a spokesman for consumer advocacy group Choice, says selling standards have improved greatly in financial services but there are still isolated instances of poor practices. “Since the bad old days mis-selling has been really cleaned up but this proves it’s not entirely dead and buried,” he said.
Mr Pettersen says brokers’ advocacy role is crucial. “People who use insurance brokers continue to use them – and there is a clear reason for that,” he said. “Their role is to act on behalf of the insurance buyer.”
GE Money’s insurance division covers sickness and injury, life, credit card and car insurance. ASIC has also cracked down on GE Money’s debt collection practices, ordering the company to pay compensation to affected customers.