The AADA have submitted a response to ASIC on its most recent draft of the Product Intervention Order (PIO) on add-on insurance and mechanical risk products.
The AADA submission was prepared with the assistance of a Dealer F&I working group and outlines our serious concerns with the PIO, cautioning ASIC to be mindful of the facts surrounding the current trading conditions being at historically low levels. We have called on ASIC to defer the introduction of regulatory change by at least 18 months, as Dealers are simply not in a position to be able to manage the training and compliance tasks that will inevitably flow from the new requirements if they are introduced.
We have also expressed concerns about the reduction in competition that will occur if the changes are introduced. Since ASIC initially began its inquiries into the add-on products market, many suppliers have withdrawn, leaving a concentrated market. Reducing competition and the availability of these products, which provide important protections for consumers, is detrimental to both Dealers and their customers.
In its commentary regarding the automotive add-on market, ASIC makes reference to products that offer poor consumer value. However, since the commencement of the ASIC consultations more than three years ago, responsible suppliers in the market have substantially altered their products and services to provide greater transparency and improved cover. Our view is that if there are products in the market that ASIC regards as being unsuitable, then they should intervene and take action directly with the suppliers concerned.
We expect ASIC to continue further consultations with us in the coming months, as they seek to refine the PIO further and consider an implementation date.