Australia’s biggest bank has conceded to the banking royal commission it breached its obligations under the Corporations Act in selling some of its credit insurance products.
The Commonwealth Bank ditched its CreditCard Plus (CCP) and Personal Loan Protection (PLP) products just weeks before the commission’s first round of hearings last month.
The bank had sold CCP to at least 65,000 unemployed customers — who would have been ineligible to claim on their policies in the event they suffered a disability or lost their jobs as they were unemployed when they were sold the policy in the first place.
The Commonwealth Bank said it was refunding those customers $10 million.
It said it has also set aside a further $16 million to refund an estimated 140,000 customers who bought its PLP and Home Loan Protection products.
The commission heard the bank knew as early as 2015 its credit insurance products were being sold to unemployed customers.
But the bank did not formally notify regulator the Australian Securities and Investments Commission (ASIC) until two years later, and only then after ASIC was alerted to the problem by a customer.
In its latest written statement to the commission, the bank now said it accepts, in failing to roll out sales scripts that specifically highlighted the policies’ employment exclusions, 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”.