CBA to plead guilty to mis-selling charges
Commonwealth Bank will plead guilty to the 30 criminal charges laid against it by Australian Securities and Investments Commission (ASIC) in the Federal Court yesterday for mis-selling consumer credit insurance (CCI). In a statement, CBA says it has agreed a Statement of Facts with ASIC and the Commonwealth Director of Public Prosecutions (CDPP).
The CDPP is prosecuting the matter after it was investigated and referred to it by ASIC.
The charges relate to CBA’s promotion and sale of CreditCard Plus and Loan Protection policies as an add-on insurance product in branches, by telephone and online, between 2011 and 2015.
During the process, CBA is accused of making false or misleading representations to customers that the insurance policies had uses or benefits to those customers when part or all the benefits were not available.
CBA has acknowledged that proceedings have been filed against it by ASIC in relation to the sale of the CCI products. It says it no longer sells these products.
It confirms that false or misleading representations were made to 165 customers in contravention of the ASIC Act when CBA did not adequately disclose to those customers at the point of sale that they were not eligible for certain benefits under the CCI policies because of their employment status.
“In 2011, the wrong decision was made to remove qualifying questions about the employment status of a customer from some mandatory sales scripts,” says CBA. “Those questions would have disclosed at the point of sale whether the customer would be eligible for certain benefits under those policies.”
CBA says it has sent compensation to the 165 customers who are the subject of these proceedings.
CBA’s conduct became the subject of a case study in the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
This is the second criminal prosecution under consumer protection provision s12DB of the ASIC Act (alleging false and misleading representations) against a bank after ASIC filed charges against ME Bank in May 2021.
In April 2021, ASIC also filed separate civil penalty proceedings against Westpac Banking Corporation for its selling practices regarding consumer credit insurance products.
In December 2011, the maximum penalty for each offence increased from $1,100,000 to $1,700,000 per offence.