Misleading broker activity still under spotlight, says regulator

Misleading broker activity still under spotlight, says regulator | Insurance Business

Misleading broker activity still under spotlight, says regulator
ASIC has vowed to continue to focus on insurance broker advertising that is misleading or deceptive, or likely to be misleading or deceptive.

ASIC renewed this promise in a report detailing enforcement outcomes for January to June 2014.

The report said: “Advertising is often a consumer’s first contact with a financial product or financial services business, and plays a significant role in the consumer’s perceptions and expectations. It is imperative that such advertisements are accurate and do not mislead consumers. This will be the case especially where new or complex products are marketed to retail investors.”

 “Insurance brokers hold a position of trust with their clients who rely on them to act with honesty and integrity to ensure that they are appropriately insured.

“Because of this position of trust, we will hold insurance brokers accountable when they fail to meet their obligations.”

It continued: “Purchasing insurance is an important decision and consumers should be able to confidently rely on representations made to them by brokers in advertising. Where the representations are misleading, we will take enforcement action.”

ASIC pointed to the case of Virgin Money Australia which it forced to pay $30,600 in penalties after the regulator issued three infringement notices for misleading online and television advertising.

The regulator has also reinforced its commitment to stamping out dishonest conduct by brokers.

"It is important that insurance brokers are honest in their dealings with both clients and insurance providers. Failure to be honest can have a detrimental impact on a client if an event giving rise to a loss has occurred while they were uninsured."

ASIC cancelled the AFS licence Parramatta-based broker WD Gelle Insurance & Finance Brokers after the regulator found it had failed to comply with its licence obligations to provide its services honestly and efficiently.