ASIC has announced that the Commonwealth Bank (CBA) will refund over 65,000 customers approximately $10 million, after selling them unsuitable consumer credit insurance (CCI) with their credit cards and a further $586,000 in premiums to around 10,000 customers after it over-insured these customers for Home Loan Protection CCI .
CCI was promoted to borrowers to help them meet their repayments if they become sick, injured or involuntarily unemployed.
CBA sold ‘CreditCard Plus’, insurance for credit card repayments, to 65,000 customers between 2011 and 2015 who were either unemployed or students and were therefore not eligible to claim for unemployment or temporary and permanent disability cover provided by the CCI.
CBA is also refunding approximately $586,000 in premiums to around 10,000 customers after it over-insured these customers for Home Loan Protection CCI taken out with a CBA home loan, resulting in the over-charging of premiums.
Between 2007 and 2015 CBA did not adjust the amount of cover under the CCI policy where the amount the customer borrowed was less than the original loan amount they applied for.
In charging these customers premiums based on the loan amount applied for rather than the amount that was actually borrowed, CBA charged these customers for more cover than they needed under the policy. In some cases, cover was also provided and paid for before a loan was drawn down.