Commonwealth Bank mis-sold consumer credit insurance to about 64,000 customers who did not meet employment eligibility criteria for claims, the royal commission into financial services misconduct heard last week.
An internal update last year showed the number of possibly unemployed customers who had bought Credit Card Plus (CCP) insurance from 2008-15 had risen to 100,000.
Most of these customers were students, and pensioners were also sold the product.
“There were many customers who did not meet the criteria to whom we sold it,” Commonwealth Bank EGM Retail Products Clive van Horen said.
“We certainly failed to take what I would consider today to be reasonable steps. There was some disclosure, but I don’t believe that disclosure was adequate.”
One customer told the hearing she was pressured into taking the insurance even after informing a bank employee she was not working and relied on Centrelink income.
The Consumer Action Law Centre has renewed calls for the scrapping of “junk” insurance.
“Consumer advocates have been complaining about these products since the 1980s and it is deplorable that banks and insurance companies have let the rip-off run this long,” CEO Gerard Brody said. “This billion-dollar junk insurance rip-off needs to end now before more Australians get hurt.”
Commonwealth Bank announced this month it will stop selling the CCP and Personal Loan Protection products, and has set aside $16 million for refunds.