The Commonwealth Bank will plead guilty to criminal breaches of the law and faces a multimillion- dollar fine for selling insurance to 165 people who were ineligible to claim benefits that were promoted in the lender’s sales pitch.
In the latest instance of fallout from the 2018 banking royal commission, the Australian Securities and Investments Commission (ASIC) on Thursday said it had filed 30 criminal charges against CBA over its promotion and sale of insurance between 2011 and 2015.
ASIC said the charges were for making false and misleading claims to customers, and the maximum penalty for each breach was $1.7 million. If a court imposes the maximum fine, it would leave CBA with a $51 million penalty for the misconduct.
The insurance in question was sold to people as they were taking out credit cards, personal loan and mortgages, and the bank promoted the insurance by saying it would help borrowers meet their repayments if they lost their job, suffered a major injury, or died.
However, many customers who took out the policies were unable to make such claims because they did not meet the banks’ eligibility criteria relating to their employment status. The scandal was explored in depth at the 2018 banking royal commission.
CBA said it had first self-reported the matter to ASIC in 2015, it had co-operated with the watchdog’s investigation into the matter. CBA said it would plead guilty to the charges.
“CBA apologises to customers who were affected by these issues and accepts that this conduct was unacceptable,” the bank said.
CBA, which has stopped selling this type of product, said that in 2011, a “wrong decision” was made inside the bank to remove qualifying questions about a customer’s employment status from the bank’s sales scripts.