Major banks in the country could soon face some court action over the sale of credit-card insurance products, which according to a class actions senior associate is “notorious for being unsuitable and consistently low-value.”
With the Commonwealth Bank (CBA) already admitting to selling loan and credit-card insurance to customers who were ineligible to claim for cover, a Melbourne-based multinational law firm is currently looking into potential class actions on behalf of short-changed consumers.
"We have found substantial evidence to suggest that a large number of Australian credit-card holders are paying hundreds, if not thousands, of dollars a year for essentially worthless insurance," Slater and Gordon's Andrew Paull told AAP. "Many policyholders are ineligible to claim some or all of the available benefits, and others are either completely unaware they have the insurance or incorrectly believe it is a requirement for obtaining a credit card."
CBA recently stated that it would withdraw its Credit Card Plus and Personal Loan Protection Products from the market, and was refunding $16m to some 140 customers who purchased the so-called “junk insurance.”
The refund came on top of the $10m the bank agreed to pay back last year for credit-card insurance that was sold to 65,000 students and unemployed people who were not eligible to make claims.
"The banks should know when this insurance is likely to be of no or limited value to their customers. However, the evidence suggests that they have continued to push these products widely and have collected millions in premiums while doing so," Paull told AAP.