Commonwealth Bank of Australia (CBA) has announced that the bank will no longer offer its current consumer credit insurance (CCI) plans including Credit Card Plus and Personal Loan Protection products.
The decision was taken following a review of consumer credit insurance products, which drew criticism from the regulators.
CCI insurance products are designed to help customers meet their repayment needs in case they lose their job, get sick or pass away. However, the regulator earlier found that the products were improperly sold to consumers.
CBA group executive of retail banking services Matt Comyn said: “Loan insurance products meet an important customer need. We have sought to meet this need through simple and readily accessible products.
“Many customers have relied on these products during very stressful times in their lives. But we have found it hard to achieve the right balance between simplicity and accessibility on the one hand, and limiting the product to the right group of target customers on the other hand.
“We have concerns that some customers who have been sold these products may not have been eligible to receive all of the employment related benefits. We have also sought consumer groups’ views on our concerns and they agree.”
Additionally, the bank will refund A$16m to up to 140,000 customers of these products.
The latest move follows a similar refund programme in last August, under which the bank agreed to reimburse $10m after the same credit card insurance was sold to 65,000 students and unemployed people who were not eligible to make a claim.
The bank will immediately begin withdrawing the productscompletely from the market and will be completed by 30 June. Existing CCP and PLP customers will, however, continue to be covered under their policies while CommBank will continue to offer its HLP product to new and existing customers.