Why ANZ isn’t the only bank that should be investigated.
ANZ landed a $280,000 fine after admitting it sold customers credit card repayment insurance that offered them no cover.
The High Court ordered ANZ to pay the penalty after the bank admitted mis-selling the insurance to 307 customers, breaching the Financial Markets Conduct Act.
ANZ offered the product to customers between 1991 and September 2019. However, it’s unlikely to be the only bank that’s sold the insurance to customers who got no benefit from their policies.
Until recently, credit payment repayment insurance was promoted by all the major banks, not just ANZ.
The insurance cover was meant to kick in if you got into trouble paying off your card debt. However, our investigations found policies had numerous exclusions, and provided little, if any, value.
Banks started quietly withdrawing the product after their Aussie parent companies pulled it from the market, following an investigation by the Australian Securities and Investments Commission (ASIC).
ASIC slated the insurance as poor value, finding customers received as little as 11¢ in claims for every dollar paid in premiums.
ANZ is so far the only bank on this side of the Tasman to admit any wrongdoing.
By May 2018, ANZ had become aware it had mis-sold the insurance. However, it wasn’t until June 2019 that it informed the Financial Markets Authority (FMA).
It’s been fined for selling 186 customers duplicate policies between April 2014 and August 2019 and selling another 121 customers policies they couldn’t claim on because of their age. The policies capped cover at either age 65 or 75.
Given the insurance was heavily promoted by all major banks, we think a wider investigation into the sale of the product is needed. Banks must have been aware they were taking customers’ money for a product that would deliver little protection.
The FMA said it’s asked banks and the companies that underwrote this insurance for information on their practices.
Were you sold credit card repayment insurance? Let us know.