About 92% of customer-owned banks sell customer credit insurance (CCI), an inquiry by the sector’s code compliance committee has found.

Customer-owned banks, also called mutual banks, are owned by their members. Examples include Regional Australia Bank, Teachers Mutual Bank and Australian Military Bank.

The sector has a code of practice, and compliance is monitored by an independent committee supported by the Australian Financial Complaints Authority code team.

The 59 code subscribers sold some 27,823 CCI policies in the 2017/18 financial year, according to the Customer Owned Banking Code Compliance Committee, which conducted an own motion inquiry.

All subscribers who sold add-on products, including CCI, earn a commission set at about 20% of gross written premium. In the case of one code subscriber, the commissions are as high as 30% for some products.

The inquiry also found code subscribers often employ commission-based sales models that could put pressure on staff to bring in more sales.

The committee says it launched the inquiry to find out how subscribers are selling CCIs and other add-ons, and if they are complying with the Code of Practice.

“Considering the Code’s requirements that third-party products must be useful, reliable and of value to consumers, Code subscribers should be thinking seriously about whether to continue selling CCI given that this type of insurance is widely considered to hold little value for consumers,” the committee says.

“At the same time, given evidence of ongoing mis-selling by other third-party sellers, Code subscribers should be closely scrutinising their own sales models and practices to ensure that mis-selling is not occurring.”

An Australian Securities and Investments Commission report in July found multiple instances of CCI being sold to consumers who were ineligible to claim or unlikely to need cover.

In many instances pressure selling and unfair sales practices were employed.

The report concludes that CCI products are extremely poor value, with policyholders getting back an average 11 cents for every dollar paid in premiums for CCI with credit cards.