The Australian Securities and Investments Commission (ASIC) called on life insurance companies to step up their product, sales, and complaints handling practices in a letter to the industry on Tuesday, following a review of direct sales practices.

ASIC recommended strengthening product design, improving sales and pay practices, applying consistent quality standards to retention calls, and streamlining cancellation processes, as well as treating complaints as valuable business intelligence to help improve customer experiences.

The recommendations are particularly important for firms that are considering expanding direct sales of life insurance, according to ASIC Commissioner Alan Kirkland.

The regulator added that it will begin investigations or take action in response to "conduct of concern."

Shares of Challenger (ASX:CGF), which owns life insurer Challenger Life Co, were up over 1% in recent Tuesday trade. Shares of ClearView Wealth (ASX:CVW), the parent company of ClearView Life Assurance, was flat.