The major is accused of making false or misleading representations
The criminal offences relate to the bank’s supply of CreditCard Plus and Loan Protection policies as an add-on insurance product sold in branches, by telephone and online.
ASIC reports that between 2011 and 2015, CBA made false or misleading representations to customers that they could make a claim against their insurance policies when some or all of these claims were not available to them.
“ASIC has been concerned about the consumer harms associated with add-on insurance for some time,” ASIC deputy chair Sarah Court said.
“ASIC pursued a criminal case against CBA after it was clear customers had been sold insurance that they had no use for.”
CBA’s conduct was the subject of a case study by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The action from ASIC forms part of the regulator’s priority to address consumer harms in insurance.
It follows ASIC’s detailed review of the sale of consumer credit insurance by 11 major banks and other lenders. Report 622, Consumer credit insurance: Poor value products and harmful sales practices, published in July 2019, revealed that the design and sale of consumer credit insurance had consistently failed consumers.
ASIC found that this insurance was poor value, its sales practices and product design caused consumer harm and consumers were being incorrectly charged.
“Following a review of consumer credit insurance, ASIC banned the unsolicited sale of this insurance through cold calls, secured over $250m in remediation for customers and has taken civil action against Westpac,” Court added.
“Today we add criminal proceedings against CBA. These interventions were necessary because the industry did not put customers front and centre.”
The matter was prosecuted by the CDPP after an investigation and referral by ASIC.
The matter has been adjourned to a date yet to be set.