Commonwealth Bank will refund $10 million to 65,000 customers sold unsuitable consumer credit insurance (CCI).

It is the second financial institution to make a major refund to consumers over so-called add-on insurance. Earlier this month QBE announced it would refund up to $15.9 million to consumers sold add-on insurance through car dealerships that provided little or no benefit.

Industry sources have told insuranceNEWS.com.au that refunds are expected to be made by other companies that offered similar add-on insurance products.

CCI is sold with credit cards, personal loans, home loans and car loans. It is promoted to borrowers to help them meet repayments if they become sick, injured or involuntarily unemployed.

The bank identified the issue and reported it to the Australian Securities and Investments Commission (ASIC), which has been investigating poor consumer outcomes associated with add-on insurance.

ASIC says Commonwealth sold CreditCard Plus insurance for credit card repayments to 65,000 customers who were unlikely to meet the employment criteria and would be unable to claim.

The bank is also refunding $586,000 in premiums to about 10,000 customers after it overinsured them for home loan protection CCI taken out with a Commonwealth mortgage.

“Consumers should not be sold products that provide little or no benefit, and banks should have processes in place that ensure this,” ASIC Deputy Chairman Peter Kell said.