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AFCA urges blanket ban on unsolicited sales

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Unsolicited sales of all financial products should be banned, according to the Australian Financial Complaints Authority (AFCA).

The Australian Securities and Investments Commission (ASIC) launched a consultation in July on a proposed ban of unsolicited telephone sales of direct life and consumer credit insurance (CCI).

In its submission AFCA backs the plan, but recommends it go much further.

“AFCA strongly believes that the proposal to ban the unsolicited telephone sales of direct life insurance and CCI should be extended to all methods of unsolicited contact and apply to all financial products,” it says.

AFCA suggests firms should not be allowed to sell financial products unless the consumer initiates contact, and says those which engage in unsolicited sales are not “acting reasonably and in good faith”.

“The unpreparedness of the consumer, together with high-pressure and unethical sales tactics, does not create an even playing field,” it says.

“If a consumer is not expecting to be approached by a financial firm about a potential financial transaction, then they cannot be prepared for the interactions that follow.

“They will not have turned their mind to if they really need the product, or if the product offered meets their specific requirements. They won’t know what to ask, or what to look for.”

In support of ASIC’s proposals, AFCA says life insurance products are complex and unsolicited sales tactics do not give consumers the chance to give them “genuine consideration”.

It says CCI products offer “little to no value for consumers” and consumers are often unable to make a claim under their policy.

ASIC says further consultation will take place before a final decision in March next year.

Click here to see AFCA’s full submission.