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Consumer group demands action on credit cover

Consumer credit insurance and gap insurance sold with car finance and other credit lines are junk products, a campaign group warns.

The Consumer Action Law Centre says add-on cover is often sold to people who are ineligible to claim or who don’t even know they have bought it, due to manipulative sales techniques.

“These products truly are junk,” CEO Gerard Brody said. “Bundling of low-value insurance with a car or other loan takes advantage of Australians. Many people don’t even realise they’re purchasing the insurance because they’re focused on buying the main product.”

The report says up to 65% of the premium paid for gap insurance goes to commissions, and consumer credit insurance salespeople typically retain one dollar in every five.

“We’re calling for the insurance industry to make these products worth something or we’ll seek to have them banned,” Mr Brody said.

“Conflicted remuneration has contributed to scandalous practices across financial planning and life insurance, and here it is again. High commissions drive this industry.”

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