The Australian Financial Complaints Authority (AFCA) has put a submission to the Australian Securities and Investments Commission (ASIC) relating to its plans to use its intervention powers to address possible consumer harm from the sale of add-on insurance and warranty products sold with motor vehicles.
AFCA said it strongly agreed with ASIC’S assessment of consumer detriment caused by the add-on products being sold along with motor vehicles.
Chief Ombudsman and Chief Executive Officer at AFCA, David Locke (pictured) said the Authority had seen instances of the products being sold to ineligible consumers who received little to no benefit from them and who were unaware they were being sold them, or of the product’s purpose.
“AFCA believes that ASIC’s intervention will have direct benefit to the community and will drive up standards across the industry,” Mr Locke said.
“AFCA’s submission also says it is critical that consumers are provided with clear information to understand the type of add-on product they are presented with, including whether the product may provide benefit, and in what circumstances.”
He said that in AFCA’s experience, the sale of add-on insurance products, especially when sold along with the primary product, significantly increased the likelihood of a consumer being sold an insurance product that did not meet their needs or offered little to no value for them.
“Given the findings by ASIC on the low value that add-on products provide…it is essential to ensure all consumers entering these types of products have access to free and independent external dispute resolution to raise any issues about these products,” Mr Locke said.
