Millions of Australians may still be owed money over consumer credit insurance sold by the Big Four banks and other lenders, with claims firm Claimo arguing that some complaints can still be pursued even after last year’s deadline, according to reporting by Yahoo Finance Australia.
The issue involves add-on insurance attached to home loans, personal loans, car loans and credit cards. These policies were sold as protection if someone lost their job or became ill. But many customers later found they did not know they had bought the cover, could not claim on it, or were misled into thinking they had to take it.
The products became one of the clearest examples of misconduct highlighted during the banking Royal Commission. In some cases, banks and insurers paid back as little as 11 cents for every dollar collected.
Claimo co-CEO Nathan Mortlock said many possible claims are still unresolved to this day.
"There was 4.7 million Aussies impacted, and only a small fraction have come forward,” Mortlock told Yahoo Finance Australia.
The firm said complaint outcomes changed sharply after the deadline tied to the Australian Financial Complaints Authority (AFCA) passed last year. About 8,000 related cases were lodged with the ombudsman before that cut-off, many of them through Claimo.
"We lodged the majority of the cases because there was a huge wave of consumers that came forward before the deadline. We are getting success rates of up to 80%. And then post deadline, major banks and insurers have collapsed the resolution to 2.7%,” Mortlock said.
Claimo is now calling on AFCA to give consumers clearer information on whether they can still try to recover money. Mortlock said some complaints could still be made under consumer protections in the National Credit Code, even if they fall outside the usual time limit.
AFCA has indicated it does not plan to change its rules again after extending the deadline last year. Its six-year time limit from the date of sale is in line with common practice among financial ombudsmen globally. It has also said sellers of the insurance are still expected to deal with complaints internally and issue refunds when appropriate, while cases involving special circumstances may still be considered.
Claimo co-CEO Nikola Araouzou said the way many of these policies were financed could mean some consumers still have grounds to seek compensation.
"People may have been told the deadline has passed, but most of these policies were financed and so the deadline shouldn’t apply. The concern is that consumers still have valid complaints are simply giving up before their cases are properly assessed. Even as a lawyer of more than two decades, I wasn’t aware I may have been entitled to a refund,” Araouzou said.
