Commonwealth Bank of Australia sold credit card insurance products to unqualified customers and understated the number of affected customers when it reported the incident to regulators in 2015, an inquiry into Australia's banking sector has found, The Sydney Morning Herald and Reuters reported separately March 19.
The Australian bank said it sold the insurance products to about 64,000 unemployed customers who were ineligible to file for claims due to an employment prerequisite. In May 2015, the bank told the Australian Securities and Investments Commission that about 28,700 customers were affected by the incident, despite an internal review in April 2015 placing the figures at more than a quarter of the 245,000 policies held by customers at the time. The policies were supposed to cover payment for credit cards should the holder lose employment due to a serious illness.
Clive van Horen, executive general of retail products, acknowledged the mistake during a banking royal commission hearing and said the bank failed to take "reasonable steps" in making sure customers were aware of the product limitations when it was sold between 2011 and 2015.
The bank has so far refunded A$26 million to customers who were wrongly sold insurance on their credit cards, home loans and personal loans.