A woman who claims she was signed up for loan protection insurance without her knowledge has failed to win a refund. 

She complained to the Australian Financial Complaints Authority (AFCA) that she took out a personal loan of $20,000 in June 2011 to fund a holiday and did not realise she also was sold loan protection until more than 10 years later. She repaid the loan in March 2012. 

She sought a premium refund plus finance interest from BankSA.  

AFCA heard the complainant took out a $21,056 personal loan and $1056 was used to fund the policy. 

She says she took out the loan at the bank’s branch, dealt with a female banker and does not recall having any discussions about insurance and the policy was added to her loan without her knowledge. 

“I have no paperwork or evidence at present as it is in 2011. I took this loan from (the bank’s relevant branch). That branch is now closed. My salary was coming into this bank, so the lady in reception gave me an appointment. I signed paperwork in the bank personally,” she told AFCA. 

The complainant says it was her first loan application and she wasn’t sure what to check and ask. She also complained she paid extra fees as she repaid the loan faster. 

Her representative told AFCA that banks had key performance indicators requiring staff to sell add on insurance. Therefore, staff were “incentivised to act inappropriately”.  AFCA also heard English was the woman’s second language. 

But BankSA denied the policy was inappropriately sold, saying that she was aware of the optional policy when she took out the loan. It also argued that complaint was outside of AFCA’s rules and should be excluded. 

AFCA threw out the complaint, saying “there is insufficient evidence the policy was, on balance, inappropriately or unfairly sold” by the bank. 

“I accept it would not be fair to draw any inferences against the bank in this instance. [The] complainant’s allegations are broad, vague and inconsistent,” AFCA said. 

“Nonetheless, the initial onus is on the complainant to show the policy was inappropriately sold. While she has made allegations about the bank’s conduct, they are broad, vague and irreconcilably inconsistent.” 

Click here for the full ruling.