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‘Minimal change’ to ALI offering under deferred sales regime

by Annie Kane11 minute read
‘Minimal change’ to ALI offering under deferred sales regime

The protection plans offered by brokers and aggregators through ALI Group are exempt from the incoming deferred sales model provisions, the financial protection provider has advised.

From Tuesday (5 October), a new deferred sales and anti-hawking model for add-on insurance comes into effect (along with a swathe of new regimes), introducing a mandatory four-day pause between the sale of a principal product/service and the sale of add-on insurance. 

The regime aims to reduce “pressure sales tactics” and promote “informed purchasing decisions by consumers in add-on insurance markets”.

Products covered under the regime include comprehensive credit insurance (CCI), which is usually sold to borrowers when they take out a mortgage, personal loan or credit card and provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury or to pay the outstanding loan balance upon death.  


While certain classes of insurance product have already been confirmed as exempt from the regime, the regulatory guide also outlines that the hawking prohibition will generally “not apply to the offer to sell or issue the add-on insurance product if the customer has specifically consented to being contacted for the purpose of making the offer or the offer ‘was reasonably within the scope of the consumer’s consent’”.

ALI Group has now confirmed that there will be “minimal change” to its business in regard to the legislative and regulatory changes.

The company, which authorises accredited brokers to act as its representative in the provision of general financial product advice and when distributing its My Protection Plan (MPP) insurance product, has advised that its product does not fall under the regime.

The product covers mortgage borrowers for death, terminal illness, trauma and injury (underwritten by Zurich Financial Services Australia).

However, ALI Group chief executive Huy Truong said that it was not consumer credit insurance (CCI), which is subject to a deferred sales model as an add-on insurance.

ALI Group said it had reached this determination following engagement with ASIC, legal advisers and its insurance provider.

Moreover it added that the vast majority of consumers believed it to be “reasonable” for their mortgage broker to discuss and offer ALI’s MPP, given that it is directly relevant to the protection of “a lifestyle that a home or property provides” and “within the reasonable scope of a home loan discussion”.

ALI Group cited an independent survey of 300 random ALI clients undertaken by Susan Bell Research in August 2021, which found that 98 per cent stated it was reasonable for their broker to discuss and offer MPP while 95 per cent state it was reasonable to discuss the risks that may make it difficult to repay the loan as part of the home loan process.

Mr Truong commented: “One of the really positive outcomes of going through this process is that it has only further reinforced our position for the last 18 years that getting a mortgage and products like ALI’s My Protection Plan go hand in hand. 

“Ninety-eight per cent of customers telling us that they believe it’s reasonable for their broker to discuss protection with them is overwhelming evidence of that.”

ALI said it would continue its education of home buyers and brokers of the existence and value of its personal life risk products as part of a home loan discussion. 

[Related: Brokers urged to prepare for new laws]

huy truong ali


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