The Australian Securities & Investments Commission (ASIC) is seeking feedback on proposals for a Regulatory Guide and prescribed customer information for a deferred sales model for add-on insurance products.
The deferred sales model, recommended by the Financial Services Royal Commission (Royal Commission) and implemented by amendments to the ASIC Act 2001 to commence on October 05, requires a four-day pause between the sale of a principal product or service and the sale of an add-on insurance product.
The regulator is seeking stakeholders’ views on:
- Draft Regulatory Guide 000, the deferred sales model for add-on insurance, which explains the scope of the deferred sales model, the obligations on add-on insurance providers, and ASIC’s power to grant an individual exemption, and
- The regulator’s proposal for the content, form, and communication of information that must be given to customers to start the deferral period.
ASIC deputy chair Karen Chester said the regulator is keen to help the industry prepare for the policy change and it will ensure that any changes would improve consumer outcomes in the add-on insurance market.
“The deferred sales model disrupts the sale of add-on insurance with a simple pause – allowing consumers the time to consider the merits of the insurance they’ve been offered and to compare with alternative products,” Chester said. “Put simply, the deferred sales model supports consumer decision-making. It is important that its introduction is accompanied by design and distribution obligations. These changes will guide the industry to remain focused on good product design, on selling to the right customers, and on fair sales practices.
“We expect compliance with the deferred sales model from day one. We will not hesitate to take action in response to any failure to meet the new requirements. Better consumer outcomes and fewer sales of low-value or junk insurances will result from this reform.”
All interested stakeholders can submit their views until April 23.