Bank’s $16m customer refund
Insurance sold to ineligible customers
The Commonwealth Bank will refund $16 million to credit card and loan insurance customers after finding more were sold policies they would not be able to claim on.
THE Commonwealth Bank will refund another $16 million to credit card and loan insurance customers after finding more people were sold policies they would not be able to claim on.
An estimated 140,000 customers will receive refunds.
Australia’s biggest bank yesterday said it would stop selling its Credit Card Plus and Personal Loan Protection products. The bank also said it would contact customers who might be ineligible for payouts because of their employment status at the time they bought their policies.
CBA retail banking head Matt Comyn, who will take over as group chief executive on April 9, said the bank had been unable to limit the sale of policies to the right customers.
The refunds are in addition to the $10 million the CBA last year agreed to pay back after the same credit card insurance was sold to 65,000 students and unemployed people.
“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,” Mr Comyn said.
The CBA said about 140,000 Credit Card Plus, Personal Loan Protection and Home Loan Protection customers were expected to receive the refunds with interest.
The bank will still sell the home loan insurance, while AIA – which is buying CBA’s BlueScope Steel chief Mark Vassella said the US economy remained strong and BlueScope had a lot of money invested there CommInsure life insurance business – will eventually replace the other policies with new products.
It also emerged yesterday that Australia’s biggest banks and insurers would be forced to overhaul their cyber security measures to better fend off state-backed hackers and online criminals. The banking watchdog, the Australian Prudential Regulation Authority, warned a significant security breach was “probably inevitable”.
APRA unveiled a new package of rules for consultation that are aimed at shoring up the ability of financial institutions to repel cyber attacks and to respond swiftly in the event of a hack. Companies will be made to routinely test their security controls and have “robust mechanisms” in place to respond to hacks and attacks.