Millions of Australians who purchased add-on insurance policies alongside their home loans, car loans, or credit cards could be eligible for compensation. These policies, often sold under misleading or high-pressure sales tactics, have left many consumers with products that were either unnecessary or unsuitable.
Despite this, a significant number of affected individuals remain unaware of their potential entitlement. The deadline for lodging claims is fast approaching, with a final cutoff date set for June 30, 2025. According to ABC News, many Australians may still miss out on refunds if they do not act promptly to submit their claims.
A History of Financial Misconduct
For decades, major banks, lenders, and insurers profited from these policies, known as consumer credit insurance (CCI) and other add-on insurance products.
These products were frequently sold alongside loans with the false claim that the loan would not be approved unless the insurance was also purchased. In many cases, customers were unaware of the policies, didn’t need them, or were ineligible to claim.
Telephone sales staff used high-pressure selling and other unfair sales practices when selling CCI, and consumers were given non-compliant personal advice to buy unsuitable policies – ASIC’s report stated.
These insurance products, often referred to as “junk insurance,” became a symbol of the financial misconduct exposed during the banking royal commission.
Despite widespread problems, it wasn’t until the royal commission’s final report in 2019 that significant changes began to take place.
The campaign to raise awareness about the issue featured a robotic model of Arnold Schwarzenegger’s Terminator head urging people to act, with the now-famous line:
Make a decision. Do it now.
Even today, there are people becoming aware of their right to a refund of junk insurance premiums.
There will be more becoming aware of their rights down the track – said an expert on the matter.
The Scale of the Issue
Over a 29-year period, more than 10 million of these add-on insurance products were sold, valued at billions of dollars. Some estimates put the total value as high as $10 billion. To date, over $270 million has been refunded to customers who were mis-sold these products, particularly those related to car-yard insurance and CCI.
However, billions more may still be unclaimed, and millions of Australians could be entitled to refunds they are unaware of. The real scandal is not just that these policies were sold, but that the industry got away with exploiting customers for so long. As one expert pointed out,
Millions of Australians may miss out on compensation they’re legally entitled to, simply because they didn’t know they were victims in time.”
The Looming Deadline
AFCA, which provides an industry-funded external dispute resolution service, has set a final deadline for claims from customers who were sold these products before 2019. Originally set for February 2025, this cut-off date was extended earlier this year to June 30, 2025. The extension is based on the notion that the banking royal commission’s final report should have alerted consumers to the issues with add-on insurance, starting the six-year claim period.
According to AFCA’s rules, claims must be lodged within six years of a consumer becoming aware—or reasonably expected to become aware—that they suffered a loss. As the royal commission report was released in February 2019, AFCA argues that this marks the start of the six-year claim window.
At the very least, AFCA should retain a discretion to allow claims, particularly for consumers experiencing vulnerability – said one expert.
With less than three weeks remaining before the deadline, there are growing concerns that thousands, if not millions, of Australians may miss out on their legitimate claims simply because they are unaware of their eligibility for compensation. The surge in awareness in the years following the royal commission proves that Australians were not previously aware of their rights.
If they were, they would have come forward in 2019 – one source explained.
