The Australian Securities and Investments Commission (ASIC) is suing Westpac over sales of consumer credit insurance (CCI). On Thursday, ASIC commenced legal proceedings against the bank in the Federal Court for allegedly misleading almost 400 customers. ASIC are alleging Westpac sold policies without customers consent.
The lawsuit is about the sale of CCI premiums for Westpac’s credit card repayment protection and flexi-loan repayment protection policies from April to July 2015. CCI is designed to cover repayments on loans and credit cards if consumers are unable to meet their minimum repayments in the event of accident, sickness, unemployment, injury or death.
Controversial practices where consumers are sold “junk insurance” happen when they go to take out a home loan, credit card. The issues will be examined in court, following the move by the corporate regulator against Westpac. ASIC has also identified that Westpac may be overcharging policies even if a loan had been paid off.
What is junk insuance?
Junk insurance is a term coined by the media following Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Add-on insurance policies are sold at the time of the purchasing loans and credit cards and often provide little value or no value.
How it affects you
Customers are required to pay additional and ongoing costs for ‘add on’ junk insurance policies. Therefore, you may be paying for certain cover they you are not aware and on which they are unlikely to ever make a claim.
Many consumers are paying for policies as part of their car finance agreements, credit cards, and personal loans. This means they are also paying interest and fees on the cost of borrowing money to pay for the policy.
Claimo can help
Claimo has helped claims back millions in unnecessary premiums and interest charges for customers since 2019.