The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry this week will finish up its first round of hearings, which has lasted from 13-23 March 2018. Insurers should be aware that a significant focus of the first round of hearings was add on insurance products, sold in connection with home and personal loans, as well as credit cards.
The Royal Commission continues to cast a wide eye over the financial services industry generally and while Insurers have to date avoided much of the scrutiny, some of the criticisms labelled at the big banks relating to their add on insurance policies should be noted by Insurers going forward.
Whilst only one of six areas of focus for the first round of hearings, it appears that add on insurance policies received a significant amount of attention from the Commission during this initial phase. Criticism appears to be levelled at the fact that the products add little or no benefit to the consumer or that many consumers did not have knowledge that an add on product had been applied to their loan or credit card.
The scrutiny of the media and the commission appears to have had a significant impact, with the Commonwealth Bank announcing that they will be ending sales of their ‘CreditCard Plus’ and ‘Personal Loan Protection’ products as well as refunding up to $16M to customers who purchased these and other similar products. These moves follow comments from Royal Commissioner Kenneth Hayne who stated that the Commonwealth Bank’s conduct in relation to these products “fell short of community standards and expectations”.
While the big banks are the subject focus of the inquiry, the potential for the eventual findings to have wide reaching implications which would affect Insurers is very real. Additionally, class actions and other litigation is already being considered by some law firms in connection with the evidence uncovered to date which may give rise to claims of unconscionable conduct on behalf of the wider financial services industry.
Mills Oakley publishes regular updates on the Royal Commission; we encourage you to keep an eye out for our posts here.
Please do not hesitate to contact us if you would like further information on any part of the Royal Commission and how it may affect you or your clients.
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