Consumer Credit Insurance (CCI) and Loan Protection Insurance (LPI) are a type of insurance that is meant to protect consumers when they take out a personal loan, credit card, or home loan.
They are designed to help you make your repayments in the event that you are unable to.
However, in recent investigations the Australian Securities and Investments Commission (ASIC) has found that CCI policies have ‘consistently failed consumers’. The ASIC review showed that for CCI sold with credit cards, consumers only received 11 cents in claims for every dollar that they paid in premiums.
The ASIC report also showed that across all CCI products, only 19 cents was recovered in claims for every dollar paid in premium.
With many sales agents implementing dodgy sales practices, it’s important to learn how to spot CCI mis-sells, so you can avoid being ripped off like many other consumers have.
These are the most common forms of mis-selling CCI and similar products.
Check your paperwork to make sure CCI wasn’t added without your knowledge or consent
CCI is sometimes sold to consumers without them even knowing. They simply add their CCI product into your existing paperwork, and hope that you don’t notice. Unfortunately, this is a common mis-sell.
It is Australia law that before you purchase insurance, the supplier discloses the product document. You should be able to make the decision on whether the product is right for you, before you buy it.
The ASIC review also showed that consumers were being charged premiums despite no longer having the loan.
CCI can only be sold as an individual item and not a package
CCI should be sold as its own individual product, that is optional for you to add on. It should not be hidden as part of a package you are buying. You should be able to opt out, and if it is sold as a package this is a mis-sell.
From the 5th of October 2021, a salesperson must legally wait 4 days after your loan is approved before they can sell you a CCI product. This will hopefully reduce CCI being hidden within packages, and people being pressured into buying it.
Make sure that you are eligible to claim
Sale of consumer credit insurance should be limited to people who are actually going to benefit from having it.
If you are already unemployed, a casual worker, or ill, you may not even be able to claim your insurance. You will have been sold a product that is essentially useless to you.
Some sales agents will give you non-compliant personal advice to buy a policy that doesn’t suit your personal circumstances, so it’s important to properly assess whether this type of policy would benefit you.
CCI is not mandatory
Sometimes sales agents will make it seem like buying a consumer credit insurance is mandatory, in order to make the sale. This is not true, and you should not be made to feel like it is mandatory for you to get CCI in order to secure your loan.
Sales agents shouldn’t be too pushy
The sales agent wants to upsell and make as much out of your sale as possible, and so often they might end up being pushy.
You can’t let yourself get trapped in a pushy sales pitch that doesn’t suit you or your needs.
It is considered mis-selling if the sales staff uses high-pressure selling and other unfair sales practices when selling you a CCI product.
Have your salesperson explain any exclusion clauses
Many consumer credit insurance policies will have special exclusion clauses, that mean the insurance might not even be relevant for you. If you have a pre-existing medical condition, your payments could be voided.
It is the salesperson job to make sure that you are correctly and properly informed about what you are buying.
What To Do If You’ve Been Mis-Sold CCI
Many companies have ceased selling CCI policies, due to the recent backlash. However, that doesn’t mean you are safe from being mis-sold this type of product.
When engaging in any type of financial services, it’s important that you do your proper research, to protect yourself from being taken advantage of.
Sale of CCI now has a lot more limitations and restrictions in place to protect consumers, but similar products still manage to be sold to vulnerable customers.
If you think you have been mis-sold CCI or a similar product, you can contact us here to begin your claims process.
RTR works on a No Win, No Fee basis, meaning you only pay us if you win.
We do all the hard work for you, so you can have peace of mind!