The Commonwealth Bank of Australia (CBA) has announced that it will no longer sell its Credit Card Plus (CCP) and Personal Loan Protection (PLP) products, noting that it will set aside approximately $16 million, including interest, to roughly 140,000 PLP and Home Loan Protection (HLP) customers.
CEO-elect and current group executive of retail banking services Matt Comyn attributed concerns over mis-selling to the bank’s decision.
“Many customers have relied on these products during very stressful times in their lives. But we have found it hard to achieve the right balance between simplicity and accessibility on the one hand, and limiting the product to the right group of target customers on the other hand,” Mr Comyn said.
“We have concerns that some customers who have been sold these products may not have been eligible to receive all of the employment-related benefits. We have also sought consumer groups’ views on our concerns and they agree.”
The bank has reported the issue to the Australian Securities and Investments Commission (ASIC) and will remunerate customers who were formally deemed ineligible to claim on the insurance products.
“We’re working closely with ASIC to provide refunds to customers who may have been ineligible to claim some benefits due to their employment status at the time of taking out the policy,” the CEO added.
“While it is fundamental to the nature of insurance products that many customers who have them will not claim on them, and indeed they hope they won’t, we need to ensure that they are at least properly eligible to do so.”
CBA expects to complete its refunding program by 30 June and stressed that existing CCP and PLP customers will continue to be covered, and that it will continue offering its HLP product.
CBA noted that it is working with insurer AIA to deliver new protection solutions.
In August 2017, CBA refunded over $10 million to 65,000 customers after selling them “unsuitable” consumer credit insurance (CCI) on home loans and credit cards.
[Related: CBA to refund $10m for mis-selling CCI]