How Queenslanders are winning back $1.5k
Australians hit by dodgy insurance and financial advice fees are receiving thousands of dollars in refunds using a new service, but a major consumer advocacy group has warned it comes with risks.
Remediator claims to be the latest service of its kind set up in the wake of the Banking Royal Commission, with some ripped-off consumers clawing back almost $12,000 with its help.
The Commission exposed the pressure tactics banks and insurers used to sell billions of dollars worth of junk consumer credit insurance, and also revealed that some financial advisers charges fees for services that were never provided.
But the Consumer Action Law Centre has warned consumer remediations services aren't regulated, with customers left with few avenues of complaint if something goes wrong.
Remediator insists payment is made on average 38 days from the point Remediator is contacted.
But its assistance isn't free: a service fee of 20 per cent plus GST is charged on the refunded amount, but this is only payable if one is secured.
For example, if a consumer won back $10,000, it would cost them $2200.
"The Banking Royal Commission exposed dirty tricks used to dupe consumers over many years. Now thanks to its findings, they can take some power and money back," Remediator spokesman David Liston said.
"Unfortunately, consumers don't even know if they're eligible or where to start the process of
investigating if they are. Remediator helps to solve that problem so it's an exciting development."
Remediator asserts it can help consumers who have paid consumer credit insurance, lenders mortgage insurance, car add-on insurance (including, among others, GAP insurance, extended warranties, and purchase price protection cover), and ongoing financial adviser fees assess if they have been inappropriately charged and make a claim.
It says it manages the entire refund process from claim to settlement on the customer's behalf.
Remediator claims it has helped hundreds of consumers across the country claw back money. Based on figures it provided, South Australians have on average the largest payouts at $3203, followed by NSW ($1970), Queensland ($1584) and Victoria ($1223).
QueenslanderAnnette Fargherwas refunded $1216 for unnecessary consumer credit insurance that was attached to a personal loan.
The Caboolture South local said she had taken out the personal loan to pay off a credit card and buy a car.
Ms Fargher, 60, who no longer has the loan, said at the time she recalled "saying yes to everything" the bank offered because she was eager to secure the money.
She did not realise the insurance may not suit her needs, and had not given it much thought, but decided to engage Remediator and try her luck.
Her refund took about a month from the point she made contact with Remediator.
"I sent an email and had a phone call and that was it," she said, adding that she did not have to supply them with any paperwork relating to her loan.
"I just told them the name of the company and they did everything."
Consumer Action Law Centre CEO, Gerard Brody, said Australia lacked a comprehensive consumer protection framework for claim management firms, such as consumer remediation services.
"Recent reforms mean that companies that deal with debt negotiation and insurance claims handling will have oversight by ASIC from later this year. However, where a firm seeks to obtain a refund of fees paid - they are not specifically regulated," Mr Brody said.
Mr Brody said this meant that if something went wrong during the claim process, customers may be less protected and would not be able to take their complaint to an external dispute resolution body like the Australian Financial Complaints Authority (AFCA).
He said the Centre's "Demand a Refund" tool, which is free to use, had helped consumers win back more than $30 million since it was established in 2016.
While the tool only helps consumers develop a tailored complaint letter to sent to insurers or financiers and does not manage the whole remediation process, Mr Brody said it was "often sufficient in getting a refund paid".
"Where a refund isn't paid, a person is then prompted to make a complaint to AFCA, which again is free," he said.
He said the some finance firms had established their own remediation schemes.
"For these schemes, the firms will generally be in touch with its customers and either provide refunds automatically or provide information about how the refund can be obtained,
"There are also numerous class actions on foot, however there will be fees associated with successful class actions - sometimes between 20 and 30 per cent of the class action award is kept by litigation funders."
Originally published as How Queenslanders are winning back $1.5k