How to get $262 back from your bank
Banking customers who were sold junk insurance are set to receive more than $32 million in remediation as many lenders dump the products altogether.
It's the last tranche of massive payments set to flow back into consumers' pockets and is worth on average $262 per customer.
The financial regulator, the Australian Securities and Investments Commission, announced on Wednesday the remediation for junk insurance linked to credit cards, personal loans and mortgages had totalled $160 million, many of which has already been returned to consumers.
It was attached to products including credit cards, personal loans and mortgages.
ASIC's deputy chair Karen Chester said the arrival of this cash into Australians' pockets couldn't come at a more critical time as many struggle during the pandemic.
"Right now the timeliness of remediation matters more than ever to consumers," she said.
"In response to COVID-19, ASIC has invested even more resources to try and accelerate remediation payments.
"We expect to see the balance of $32 million returned to consumers ASAP."
ASIC has sent a stern warning to lenders offering dud products that they could no longer get away with it and they would remain under close scrutiny.
"It's both unfair to consumers and ultimately costly to business to sell junk insurance," Ms Chester said.
The remaining $32 million in remediation should handed back to all consumers by the end of August.
Impacted customers do not to do anything, their bank who sold them the product will ensure they are correctly reimbursed.
ASIC found the products received "no or very little value" and many customers were incorrectly charged for consumer credit insurance.
ASIC also revealed in the 2011-18 financial years of those dud products sold to consumers only 19 cents was paid in claims for every $1 shelled out in premium costs.
The review of consumer insurance involved 11 lenders including the big four banks - ANZ, the Commonwealth Bank, National Australia Bank and Westpac.
It also included smaller lenders such as Bendigo and Adelaide Bank, Citigroup, Latitude Finance and Suncorp.
The Consumer Action Law Centre's chief executive officer Gerard Brody said it was a great result to see financial institutions reprimanded for selling dud products.
"Australians have been sold junk insurance for years and years - so it's welcome to see ASIC forcing banks and lenders to provide multimillion-dollar refunds," he said.
"It's a reminder that too often banks have put profits ahead of their customers."
He said many consumers were unable to rely on the insurance policies when they needed to make a claim.
"We saw many people being sold policies they simply could never claim on, and thousands not even knowing what they'd been sold," Mr Brody said.
Originally published as How to get $262 back from your bank