Facing the contempt of 30 criminal charges in the Federal Court, the Commonwealth Bank of Australia (CBA) announced that it will plead guilty to all the allegations of mis-selling consumer credit insurance to its customers.
The CBA has reportedly misled 165 customers by producing bogus and misrepresentative data and sold them loan protection insurance between the period of 2011 and 2015.
Various accusations also state that CBA did not reveal to the customers that they cannot avail certain benefits under the insurance policy because of their employment status and kept them under a false impression.
CBA’s optional consumer credit insurance policies like CreditCard Plus and Loan Protection were misguidedly sold with CBA credit card finance and promoted at CBA branches through telephonic and online mediums.
The CBA is facing fines of up to $51 Mn in total in this banking knavery-fiasco.
CBA in its statement has revealed that they lured their staff into promoting their products by offering them a range of amenities like financial bonuses to employees who are able to meet sale targets, $2,500 Flight Centre gift vouchers and $250 Red Balloon gift vouchers, as well as Apple iPads and travel money cards valued up to $500.
CBA also accepted its mistake of removing important qualifying questions related to the customer’s job status from some mandatory sale scripts. It said, “Those questions would have disclosed at the point of sale whether the customer would be eligible for certain benefits under those policies.”
However, in its announcement, CBA also stated that it has fully cooperated with the national corporate regulator ASIC (Australian Securities and Investment Commission) during its investigation and Commonwealth Director of Public Prosecutions in the referral process. After a test case filed by the Financial Services Royal Commission, the ASIC has started its investigation in this case.
CBA said, “CBA will plead guilty to the charges and has agreed on a statement of facts with ASIC and the Commonwealth Director of Public Prosecutions.”
Apologising to the customers for its ‘unacceptable conduct’, CBA also reassured that it compensated the 165 customers affected due to its corporate skulduggery.