If you've ever had a personal loan, credit card, car loan, home loan or novated lease, you might be eligible for a refund for premiums on "junk insurance policies".
Research from consumer advocate Claimo has found up to one in three Australians may have been sold Consumer Credit Insurance (CCI) policies over the years, which drew the ire of ASIC in 2019.
The ASIC report found CCI was often sold to customers ineligible to claim or unlikely to benefit, with sales staff frequently using unfair sales practices and giving non compliant personal advice.
ASIC implemented a remediation program that has already seen more than 500,000 customers receive refunds, but Claimo Director and Founder Nathan Morlock says their research suggests a far bigger scale.
"The data suggests literally one in three Aussies might have been sold [consumer credit] insurance," he told Savings.com.au.
He said these policies were often sold on novated leases, with front line responders like nurses and police officers as well as other government staff seemingly particularly affected.
A novated lease is a salary sacrifice arrangement where employers make payments towards a vehicle lease out of a employees pre-tax salary, which reduces taxable income.
Mr Morlock says Claimo have dealt with many government workers who unknowingly had these tax benefits negated through CCI charges.
"Because frontline workers are eligible for these tax benefits, they sign up, but what they don't necessarily know about are extra hidden charges for insurance policies," he told Savings.com.au.
"Lease protection, guaranteed asset protection, guaranteed buyback insurance, these are the types of policies added on when they didn't know about it or necessarily need it.
"People who are predominantly affected includes the service staff...for example, there's a whole community of Ambos in Victoria who are using our service."
In one case, an ex police officer claimed a refund of nearly $20,000 for CCI premiums on a home loan.
What is Consumer Credit Insurance?
In theory, these policies cover consumers who are unable to make their loan or lease payments because of unemployment, sickness, injury or even death.
The ASIC investigation found that for every dollar spent on CCI premiums, only 19 cents was paid in claims.
Several of the recommendations in the Hayne Royal Commission into Banking in 2018 related to these policies, including banning the 'hawking' of insurance products and a deferred sales model, which gives customers three days to decide whether they want the policy.
Most lenders have discontinued selling CCI altogether since 2018, with CommBank, ANZ and Westpac settling a class action lawsuit in 2022 for $126 million to be split among impacted consumers.
Those who were involved in these lawsuits can't claim for the same policies through Claimo, but can still apply for refunds on other policies.
How Claimo works
Any sales of CCI that did not comply with the law at the time are eligible for refunds.
If you think you've been affected, you can contact the dispute resolution channel at whichever lender sold you the policy, then if your request is declined it can be taken to the Financial Ombudsman.
Claimo is a claims resolution service that will essentially do this for you; you'll just need to fill out a form on the website and let them know which product and lender you are claiming the refund for (ANZ credit card for example).
"Once we get that message back, we'll then go and contact your bank," Mr Morlock told Savings.com.au.
"We'll start requesting all the relevant documents to see if you've been charged, we'll start a financial investigation.
"It's two minutes work for you and then we do all the hard work."
Claimo charge a fee of 30% of the refund amount (plus GST), but there is no cost if the claim is unsuccessful.
Picture by Leon Dewiwje on Unsplash
Ready, Set, Buy!
Learn everything you need to know about buying property – from choosing the right property and home loan, to the purchasing process, tips to save money and more!
With bonus Q&A sheet and Crossword!
Brooke Cooper
Harry O'Sullivan
Hanan Dervisevic
William Jolly
