The Turnbull Government needs to get serious about reforms to consumer protection laws in the wake of an announcement today by the corporate watchdog that QBE will refund $15.9 million to 35,000 customers who were sold add-on insurance that they didn’t need.
Today’s announcement by ASIC is clear evidence that consumers continue to get a bad deal under current laws and reforms need to be made to improve consumer protections against junk insurance.
ASIC has found that QBE Guaranteed Asset Protection (GAP) insurance:
- was sold where there was unlikely to be a gap between the insured value of the car and the loan balance, for example because the customer paid a large deposit
- duplicated existing cover held by consumers
- provided consumers with more insurance than they needed
ASIC also found that QBE Consumer Credit Protection (CCI) insurance was sold to young people who had no dependents and who were unlikely to need the cover.
According to ASIC: “CCI has long been associated with poor consumer outcomes in Australia and overseas, including consumers being unaware that they have purchased CCI and consumers being ineligible to make a claim on their CCI policy.”
In April 2016 the Government announced that it would bring forward draft legislation by the middle of this year on the product intervention power which would afford the regulator the powers to ban products such as these altogether.
To-date we have seen no legislation and Treasury officials confirmed recently that drafting of the laws had not yet begun.
The longer the Government drags its heels, the higher the number of vulnerable consumers who will be signed up to insurance products they don’t need and be ripped off.
Reforms to protect against add-on insurance look like going the same way as the Turnbull Government’s much hyped but not delivered credit card and small amount credit contract reforms.
This Government is pretty quick to make promises when it wants a headline but then does nothing to deliver much needed reforms.
The Turnbull Government is more focused on division and disunity internally rather than doing the job they are elected to do and which, when it comes to junk insurance, would be delivering reforms which protect consumers.
WEDNESDAY 2 AUGUST 2017