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CBA will plead guilty to consumer credit mis-selling charges

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Commonwealth Bank of Australia (CBA) says it will plead guilty to 30 criminal charges filed by the corporate regulator alleging the business mis-sold consumer credit insurance (CCI) products between 2011 and 2015.

Last week the Australian Securities and Investments Commission (ASIC) announced it has commenced proceedings in the Federal Court, following an investigation of the matter.

The charges relate to CBA’s promotion and sale of CreditCard Plus and Loan Protection policies as an add-on insurance product through online and telephone channels, ASIC said in a statement.

According to ASIC, the bank “made false or misleading representations to customers that the insurance policies had uses or benefits to those customers when part or all the benefits were not available”.

CBA says it no longer sells the products and that it has “sent compensation to the 165 customers who are the subject of these proceedings where they paid premiums”.

It also issued an apology to the customers who bought the policies, saying it “accepts that [the] conduct was unacceptable”.

“CBA first self-reported the issue to ASIC in 2015,” the bank said.

“CBA has cooperated fully with ASIC during its investigation, and with the referral process to the Commonwealth Director of Public Prosecutions (CDPP).

“CBA will plead guilty to the charges and has agreed a Statement of Facts with ASIC and the CDPP.”

It is the second legal action taken by ASIC against a bank relating to mis-selling of CCI products. In April it launched civil penalty proceedings against Westpac in the Federal Court.

A 2019 report by ASIC found CCI products offered extremely poor value, with policyholders getting back an average 11 cents for every dollar paid in premiums for CCI with credit cards.

Click here for the Statement of Facts.