Home / Daily / Criminal charges filed against CBA over CCI mis-selling
16 September 2021
The corporate watchdog filed 30 criminal charges in the Federal Court today against Commonwealth Bank of Australia (CBA), alleging the lender made “false or misleading representations” to sell consumer credit insurance (CCI) products.
CBA responded swiftly, saying it “will plead guilty to the charges” and that it has agreed to a statement of facts with the Australian Securities and Investments Commission (ASIC).
“CBA apologises to customers who were affected by these issues and accepts that this conduct was unacceptable,” the bank said in a statement this afternoon.
ASIC says it commenced legal action after an investigation into the matter and later referred it to the Commonwealth Director of Public Prosecutions.
The regulator says the charges relate to CBA’s promotion and sale of CreditCard Plus and Loan Protection policies as an add-on insurance product in branches, by telephone and online.
“The charges relate to allegations that between 2011 and 2015, CBA made false or misleading representations to customers that the insurance policies had uses or benefits to those customers when part or all the benefits were not available,” ASIC said in a statement today.
ASIC says CBA has co-operated with the investigation and that the matter is to be listed for first mention in the Federal Court in Sydney, on a date to be fixed.
The bank says it no longer sells the products and that it has “sent compensation to the 165 customers who are the subject of these proceedings where they paid premiums”.
“CBA first self-reported the issue to ASIC in 2015,” the bank said.
“ASIC investigated this matter following its consideration as a case study at the [Hayne] royal commission.”
It is the second such legal action taken by ASIC against a bank relating to mis-selling of CCI products. In April it launched civil penalty proceedings against Westpac in the Federal Court.
A 2019 report by ASIC found CCI products offered extremely poor value, with policyholders getting back an average 11 cents for every dollar paid in premiums for CCI with credit cards.
Consumer Action Law Centre CEO Gerard Brody backs the latest court proceedings.
“It’s good to see this criminal action being taken against CBA,” Mr Brody told insuranceNEWS.com.au. “It's important that institutions are made accountable for their criminal conduct.
“The scandal associated with CBA mis-selling credit-card and loan protection insurance of was uncovered through our client’s testimony to the [Hayne] royal commission.”
Click here for the statement of facts.