Australia’s largest lender, Commonwealth Bank of Australia (CBA), said yesterday it would plead guilty to 30 counts brought against it in federal court for mis-selling consumer credit insurance (CCI) to its clients.
The proceeding has been filed by the Australian Securities and Investments Commission (ASIC) regarding the sale by CBA of CCI products between 2011 and 2015 to 165 clients. CBA no longer sells these products.
The CBA did not adequately disclose to these point-of-sale customers that they were not eligible for certain benefits under CCI policies due to their employment status.
In a statement, the bank said: âIn 2011, the wrong decision was made to remove qualifying questions about a client’s employment status from certain mandatory sales scripts. These questions would have revealed at the point of sale whether the customer would be eligible for certain benefits under these policies. “
The ABC said it had fully cooperated with ASIC during its investigation and with the referral process to the Commonwealth Director of Public Prosecutions (CDPP). The CBA will plead guilty to the charges and have agreed to a narrative with ASIC and CDPP.
The CBA first reported the issue to ASIC in 2015. ASIC investigated this matter after viewing it as a case study to the Royal Commission on Financial Services.
The CBA has sent compensation to the 165 clients who are the subject of these proceedings when they paid premiums.
CBA apologizes to customers who have been affected by these issues and accepts that this conduct was unacceptable.
Action against ABC is part of ASIC’s priority to address consumer damage insurance. It follows a detailed examination by ASIC of the sale of CCI by 11 major banks and other lenders. ASIC Report 622, Consumer Credit Insurance: Low-Value Products and Bad Selling Practices, published in July 2019, revealed that CCI’s design and sale has consistently failed consumers. ASIC found that CCI was of low value, that CCI’s sales practices and product design hurt consumers, and that consumers were wrongly billed for CCI.
ASIC has also taken legal action against Westpac Banking Corporation (Westpac). In April 2021, ASIC initiated civil sanction proceedings in Federal Court against Westpac, alleging it had mis-sold CCI with credit cards and other credit facilities to customers who had not accepted. purchase the policies from April 7, 2015 to July 28, 2015.
In addition to enforcement actions, ASIC has secured more than A $ 250 million ($ 183 million) in redress for consumers harmed by the practices of offending lenders. CCI’s remediation program has brought in over A $ 430 on average to more than 580,000 consumers.