ASIC's review of the sale of consumer credit insurance has lambasted the sector for consistently failing consumers in the design and sale of products.
According to ASIC report 622, CCI products are being promoted and sold to customers unfairly, and are of a "very low value", revealing consumers who purchase CCI sold alongside their credit cards only receive 11 cents in claims for every dollar paid in premiums. Across all lenders, the figure moves to just 19 cents in the dollar.
ASIC said CCI sales practices were harmful to consumers, noting CCI was sold to people despite the fact they were ineligible to claim under their policy, and added telephone sales staff use high-pressure selling and other "unfair sales practices" when selling CCI.
ASIC commissioner Sean Hughes said the corporate regulator was "deeply troubled" by the findings in the report, which included the likes of Commonwealth Bank and its subsidiary Bankwest, ANZ, NAB, Westpac, Suncorp, Citigroup and others.
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"Lenders and insurers have had more than enough time to improve sales practices and provide better value for consumers," Hughes said.
"An inevitable consequence of these widespread failings and mis-selling practices will involve ASIC taking significant enforcement action against some of the entities named in our report."
The report has led the corporate regulator to begin investigations into the suspected misconduct of "several entities" in the market, which ASIC has flagged could lead to enforcement action. ASIC said it would reveal the identities of those suspects should proceedings commence.
Additionally, the regulator will begin consultation to ban unsolicited outbound CCI sales over the phone. The practice has come under scrutiny recently, after the Royal Commission and ASIC's review of direct life insurance revealed issues emanating from the outbound sale of life insurance.
ASIC said it expected lenders and insurers to design and offer products with "significantly higher claims ratios," and would continue to collect and publish data to hold institutions to account.
"If we do not see early, significant and sustained improvement in the design and sale of consumer credit insurance, our next steps may involve the deployment of our new product intervention power where we see a risk of significant consumer detriment," Hughes said.
"We also will not hesitate to pursue civil penalties where there has been a failure by any lender or insurer to act efficiently, honestly and fairly. All options are on the table."
The report also laid out standards for the design and distribution of CCI sold by lenders, and ASIC said it expects lenders and insurers to either meet those standards or completely stop selling CCI until they do.
"Regrettably, the ongoing systemic failings and misconduct we have seen in the CCI market demonstrate that a range of robust regulatory responses is required," Hughes added.
"ASIC is committed to address the unfairness to consumers and lack of transparency our report has uncovered. Product issuers and distributors in the CCI market need to start to put their consumers front and centre."