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Tempering their sense of justice made banks billions in dud insurance

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11.07.2019

Four potent words "temper your sense of justice" caused a furore when CBA boss Matt Comyn recounted to the banking royal commission that this was the message from his boss, Ian Narev, when he suggested the bank stop mis-selling dud insurance to unsuspecting customers.

Comyn was running CBA’s retail bank at the time of the 2015 meeting and was becoming increasingly uncomfortable that Consumer Credit Insurance products were being sold to customers under false pretences.

Replay

But it now seems the entire financial services sector has been tempering its sense of justice on this product for almost a decade.

A report released by the Australian Securities and Investments Commission (ASIC), Consumer credit insurance: Poor value products and harmful sales practices, reveals that between 2011 and 2018 eleven financial institutions including the big four banks, CBA, National Australia Bank, Australia & New Zealand Banking Group, Westpac, Bendigo and Adelaide Bank and Suncorp, flogged CCI products to millions of customers and made a motza.

This junk insurance generated almost $5 billion in premiums over that time period. The payout was less than $1 billion in claims, which made it hugely profitable but grossly unethical.

The banks, and other financial institutions, turned a blind eye as they signed up unsuspecting customers who believed the insurance would........

© The Age