SYDNEY, AAP – The Commonwealth Bank has pleaded guilty to 30 criminal charges of selling customers insurance they could not use.
The bank deceived 165 customers buying credit card and loan insurance from 2011 to 2015 about their ability to claim.
Customers were ineligible to claim if they were not working at the time of buying the insurance.
The bank failed to tell customers this, although it did provide a product disclosure statement.
The Australian Securities and Investments Commission, which has prompted the legal action, had earlier required salespeople to explain the main exclusions in policies.
Bank staff discovered the error in 2015. However they prioritised the credit card insurance and did not address loan insurance until two years later.
The bank informed ASIC of the credit card insurance problems and soon required salespeople to explain the main exclusions. However they did not do so for online forms until 2017.
The victims of the credit card insurance paid $11 million in premiums and received $500,000 in claims.
A spokesman for the bank said it pleaded guilty at the earliest opportunity.
He said the Commonwealth no longer sold these products and has compensated the 165 customers.
“This conduct was unacceptable,” the spokesman said.
The Commonwealth Director of Public Prosecutions is pursuing the case.
ASIC has since banned the sale of this type of insurance through unsolicited calls.
The watchdog this year started legal action against Westpac for the way it sold consumer credit insurance.
The mishandling of the insurance sales was detailed in the banking royal commission, which exposed a raft of dodgy practices in financial services. The commission ran from 2017 to 2019.