Dec 4 (Reuters) - Australia’s corporate regulator on Wednesday banned telephone sales of life insurance after an inquiry into the financial sector last year found “cold calling” had been abused to get customers to sign up for products they did not need.
The ban effective from Jan. 13 would “stop practices that lead to poor consumer outcomes and destroy trust in the financial system”, Australian Securities and Investments Commission (ASIC) director Sean Hughes said in a statement.
“From January, firms will no longer be able to call consumers out of the blue and use sophisticated sales tactics to pressure people into buying life insurance and (consumer credit insurance) products.”
Among the many examples of abuse that shocked the country when they were revealed last year, the powerful Royal Commission inquiry heard an account of a telephone salesperson selling a complicated insurance product to a man with Down Syndrome who clearly did not understand what he was buying.
The life insurance arm of Australia’s largest lender, Commonwealth Bank of Australia, was convicted for breaches of an anti-hawking law last week and fined A$700,000 ($475,020) for selling life insurance policies over unsolicited phone calls between October and December 2014.
ASIC has said those laws failed to stamp out the practice. ($1 = 1.4736 Australian dollars) (Reporting by Niyati Shetty in Bengaluru; Editing by Byron Kaye and Stephen Coates)