Consumer Action Law Centre says it’s time for the banking and insurance industry to end the billion dollar junk insurance rip-off they’ve let fester for over a decade.
The statement comes following long-time Commonwealth Bank customer Irene Savidis (Witness statement soon to be published) giving oral evidence at the Royal Commission yesterday.
In October 2014, Ms Savidis applied for a credit card online. She was not working at the time and was reliant on Centrelink payments to support her son. Ms Savidis did not have a job, which she told CBA, yet CBA still sold her CommInsure CreditCard Plus Insurance, a form of consumer credit insurance (CCI). A key “benefit” of this insurance is to cover your loan repayments if you lose your job, which was useless to Ms Savidis given that she was unemployed.
Ms Savidis gave evidence to the Commission about the pushy sales tactics of the CBA staff member who encouraged her to purchase the policy. Ms Savidis also gave evidence about the difficulties she encountered when she tried to cancel the insurance. Ms Savidis told the Commission she contacted CBA multiple times, only to be talked around by the CBA staff member not to cancel her policy. Eventually Ms Savidis was able to cancel her CCI policy.
Just two weeks ago, CBA announced that it would no longer sell certain CCI policies with credit cards and personal loans.
Despite this scandal, Australians are still at risk of being ripped off by add-on insurance.
“This billion dollar junk insurance rip-off needs to end now before more Australians get hurt” says Gerard Brody, CEO of Consumer Action Law Centre. “Irene’s case is just one of the many examples we’ve seen of the pushy, unethical sales tactics used to sell junk to Australians.”
“Commonwealth Bank has taken action on some products ahead of questions from the Royal Commission, but is still today selling CCI with its home loans. The Commission has pointed out the huge revenue CBA earns from this similarly junk product. We continue to hear of people who are left with the impression that the insurance helps them get approved for their home loan, which is just false.”
“Consumer advocates have been complaining about these products since the eighties and it is deplorable that banks and insurance companies have let the rip-off run this long. It’s time our financial institutions stopped selling junk and refunded the well over a billion dollars they’ve taken from hard working Australians.”
Gerard Brody is available for comment. Irene Savidis will not be available for further comment at this stage.