The Commonwealth Bank (CBA) has again been forced to eat humble pie, announcing that it will refund an estimated 140,000 customers a potential total of $16 million following a review of its credit card plus (CCP) and personal loan protection (PLP) products.
The review found that some customers who were sold the products may not have been eligible to receive all the associated employment-related benefits. Consumer groups supported this finding.
In addition to offering refunds to current customers of the PLP and home loan protection (HLP) products, CBA would withdraw the CCP and PLP offerings from the market by 30 June, this year.
A similar refund program for CCP commenced last year.
CBA’s group executive retail banking services and incoming chief executive, Matt Comyn, acknowledged that damage poor insurance products could do to customers in times of need.
“Loan insurance products meet an important customer need. We have sought to meet this need through simple and readily accessible products. Many customers have relied on these products during very stressful times in their lives,” he said.
“We are firmly committed to doing what is right for our customers, which is why we have reported this issue. We’re working closely with ASIC to provide refunds to customers … 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.”
The bank would again outsource its clean-up work, saying that it would work with AIA “to deliver new and innovative protection solutions for our customers, so that an important need can be met.”
In this, it would seem that AIA’s acquisition of CommInsure has led to another new line of business, as they continue their work with CBA.
The new products would reflect recent improvements to product design and sale processes developed by the Australian Securities and Investments Commission (ASIC) and industry.
Existing CCP and PLP customers would continue to be covered under their policies.