Major lender Westpac will refund more than 10,600 home loan protection insurance customers on any premiums paid for insurance cover they did not need, following an ASIC investigation.
According to ASIC, an investigation uncovered that Westpac may have been collecting premiums for home loan insurance when customers did not have a home loan. Customers affected include those who took out a Mortgage Secure or Home Loan Protection insurance policy when they applied for a home loan. These products were sold as consumer credit insurance since 2002 and 2007 respectively.
In particular, ASIC was concerned that Westpac had been collecting premiums before a home loan was drawn down, after a home loan was repaid or where a customer did not go ahead with a home loan.
“It is important that a product is sold in a way that is consistent with what it is designed to do, in order to ensure that customers don’t pay for something they don’t need. In this case, Westpac customers may have been paying for insurance cover they did not need, either because it covered risks that were not present or risks against which they were already insured,” ASIC deputy chairman, Peter Kell said.
As a result, Westpac will write to affected customers from late October 2015 and offer to refund the premiums.
contacted Wesptac for comment, but did not receive anything by the time this article was published.