More than $10 million in refunds will be made by the Commonwealth Bank after the financial regulator found it was selling unsuitable insurance policies.
The development comes after the Australian Securities and Investment
Commission (ASIC) secured almost $16 million in refunds from QBE for selling car insurance products that provided "little or no
benefit" to its customers.
The Commonwealth Bank will issue refunds to 75,000 customers who took out
unsuitable consumer credit insurance (CCI) on top of their credit card,
mortgage, personal loan or car loan.
Most of the $10 million refund will be made to 65,000 customers who would
not be able to file a successful claim because they were students or were
unemployed. These people would've purchased CCI from 2011 to 2015.
The remaining 10,000 customers, who were were over-insured on their home
loans and therefore paid higher-than-necessary premiums, will be refunded a
share of $586,000. These customers could have been over-insured during an
eight-year period until 2015.
The sale of unsuitable insurance is described as
"unacceptable" by Peter Kell, the deputy chair of ASIC.
"Consumers should not be sold products that provide little or no benefit,
and banks should have processes in place that ensure this," he says. "One
of ASIC's priorities is addressing poor consumer outcomes associated with
add-on insurance, including CCI."
The Commonwealth Bank will be contacting customers eligible for a refund