Commonwealth Bank of Australia (CBA) has admitted breaching obligations under the Corporations Act by selling credit insurance products to thousands of unemployed customers.
CBA conceded its fault to the banking royal commission. It plans to refund affected customers around $10 million.
The bank sold its CreditCard Plus (CCP) product to at least 65,000 unemployed customers – who would have been unable to file claims on the policies if they suffered a disability or lost future jobs because of their job status when they were first sold the policy.
The bank revealed it has also set aside a further $16 million to refund around 140,000 customers who bought its Personal Loan Protection (PLP) and Home Loan Protection products.
Both the CCP and PLP products were scrapped by CBA just weeks before the banking royal commission’s first round of hearings in March.
During the hearings, the commission heard the bank was aware as early as 2015 that its credit insurance products were being sold improperly to unemployed customers. However, it did not notify the Australian Securities and Investments Commission (ASIC) until two years later.
CBA has accepted its wrongdoings, especially in failing to issue sales scripts that highlighted its policies’ employment exclusions. In a written statement to the commission, the bank said it breached its obligation under the Corporations Act “to do all things necessary to ensure that it provided the CCP and LPP products efficiently, honestly and fairly.”