Following a review of consumer credit insurance products, CommBank has decided to end sales of its current Credit Card Plus and Personal Loan Protection products.
Matt Comyn, Group Executive Retail Banking Services, 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,” Mr Comyn said.
“We are firmly committed to doing what is right for our customers, which is why we have reported this issue. We’re working closely with ASIC to provide refunds to customers who may have been ineligible to claim some benefits due to their employment status at the time of taking out the policy. While it is fundamental to the nature of insurance products that many customers who have them will not claim on them, and indeed they hope they won't, we need to ensure that they are at least properly eligible to do so.”
CommBank will proactively contact those customers who could be affected and has set aside approximately $16 million for refunds, including interest, to an estimated 140,000 customers of the PLP and Home Loan Protection products. This follows a similar refund program which commenced last year for some CCP customers.
The changes required to withdraw the product from the market will start immediately and will be completed by 30 June. Existing CCP and PLP customers will continue to be covered under their policies and CommBank will continue to offer its HLP product to new and existing customers.
CommBank is working with AIA, a leading global insurer which is acquiring the CommInsure life insurance business from CBA, to deliver new and innovative protection solutions for our customers, so that an important need can be met.
These new solutions will build upon the recent improvements to product design and sales processes that have been developed by ASIC and the industry to improve customer outcomes.
Damien Mu, Chief Executive Officer of AIA for Australia and New Zealand, said: “We look forward to developing a world class partnership with CommBank and co-creating propositions that ultimately offer great long term value for customers.”
“We look forward to working with AIA to build new generation insurance products to protect our customers through key life stages,” Mr Comyn said.
Any CommBank customers concerned about their CCP, PLP or HLP cover can call 13 22 21.