The Insurance Council of Australia (ICA) has backed a proposal for extended warranty reform that features a 10-day cooling-off period and written disclosure from traders.

The proposal is one of three outlined in a Treasury consultation paper on recommendations from the Australian Consumer Law Review in relation to the consumer guarantee framework.

It also requires traders to provide oral advice, where practical, on a consumer’s cancellation rights before entering into the purchase contract. In the case of online purchases, oral disclosure would not be required because it is not reasonably practical.

“[ICA] submits that this option would best meet the policy objective of ensuring that consumers are better able to make informed decisions about whether to purchase an extended warranty,” the Insurance Council says in a submission. “This option would also close the existing regulatory gap for warranties that are not insurance products.

“We do not support the sub-options of requiring only disclosure or providing only cooling-off rights, because we see both measures as complementary in supporting informed decision-making.”

The Treasury consultation paper says this option would require a definition of “extended warranty”, because current legislation has no such term.