The Federal Court has ordered Westpac to pay a A$1.5 million fine for mis-selling consumer credit insurance to customers who had not agreed to buy the insurance.
In 2015, Westpac wrote consumer credit insurance policies for 141 customers who had taken out a credit card or Flexi Loan but who had not asked for the insurance.
Westpac then notified the customers that their premiums would be debited from their accounts.
The court ruled that the bank did not have any right to these payments and the customers were not liable to pay them.
ASIC, which brought the court action against Westpac, said in a statement that it has secured a total of $270 million in remediation across the sector for consumers harmed by the mis-selling of consumer credit insurance.
Last October Commonwealth Bank pleaded guilty to charges of making false or misleading representations to 165 customers when selling consumer credit insurance.
CBA’s false or misleading representations, which were made between 2011 and 2015, were that customers could claim against the policies “when some or all of these claims were not available to them”.
Mis-selling of consumer credit insurance has been on ASIC’s radar for some time, with warnings about sales practices and products quality going back to 2011.
In 2019, it released the findings of a review of the sector, saying the design and sale of CCI had consistently failed consumers. Products were of “low value” and sales practices “unfair”.
CCI also came in for attention at the Hayne royal commission, which was equally critical. Since then, a large number of financial institutions have stopped selling the product.