Millions of Australians who unknowingly purchased worthless insurance policies with home loans, car loans, or credit cards may be owed compensation. But with the final claim deadline of June 30, many are at risk of missing out.
For years, major banks and insurers earned billions from so-called “add-on insurance” products like Consumer Credit Insurance (CCI), while giving back just cents on the dollar—sometimes as little as 11 cents. These products, heavily criticized during the 2019 Banking Royal Commission, were often bundled with loans or credit cards, frequently without clear explanation or customer consent.
Although the insurance was sold as financial protection in case of illness, accident, or unemployment, many customers didn’t qualify for the coverage or weren’t even aware they had bought it. Some were misled into thinking their loan wouldn’t be approved unless they accepted the insurance.
A Longstanding Scandal
What shocked many wasn’t just that the products were poor in value—it was how long financial institutions got away with selling them. ASIC first investigated these insurance policies in 2011, issuing warnings that largely went unheeded until public scrutiny intensified in 2019 following the Royal Commission’s report.
Since then, over $270 million has been refunded to consumers through class actions, internal resolutions, and complaints submitted to the Australian Financial Complaints Authority (AFCA). Yet billions remain unclaimed.
AFCA has extended the final cut-off for claims to June 30, 2025, for insurance sold before July 2019. It argues that most consumers should have been aware of the problem since the Royal Commission’s final report was released in early 2019, triggering a six-year period to lodge complaints.
With the deadline now less than three weeks away, concerns are mounting that millions still don’t know they’re eligible for a refund.
Lessons from the UK
A similar scandal in the UK involving Payment Protection Insurance (PPI) resulted in refunds exceeding £48 billion. The UK financial watchdog ran nationwide awareness campaigns, including TV ads, to alert the public. In contrast, Australia’s public outreach has been minimal.
Advocates Call for More Time
Legal advocates argue the refund process is still too hidden. Many consumers never realized they had junk insurance, and they may only discover their eligibility after the deadline.
Consumer Action Law Centre and other advocates say AFCA should extend the deadline or at least offer exceptions for vulnerable people. They also urge banks and insurers to proactively identify affected customers.
Meanwhile, Claimo, a refund assistance firm, says it has received 70,000 refund cases, valued at $67 million. It believes more than 5 million Australians were sold add-on insurance worth an estimated $17 billion.
Nathan Mortlock, Claimo’s founder, criticized AFCA’s rigid rules, arguing they create barriers for many victims who never realized they were misled.
Despite multiple ASIC investigations and billions already refunded, the burden to act still lies on consumers—many of whom may never know they were eligible.
