Texas Tech University

CBA credit card scandal 'just the tip of the iceberg'

The New Daily

August 15, 2017

The New Daily - The Commonwealth Bank credit card insurance scandal is the "tip of a very large iceberg" , legal experts have warned. Philippa Heir, a senior solicitor at the Consumer Action Law Centre, welcomed the bank's promise to repay $10 million to 65,000 students and unemployed people sold dodgy credit card insurance.

An expert on investor behaviour, Dr Michael Finke of Texas Tech University, warned in a recent financial literacy series that fear of losing money temps consumers to buy unnecessary insurance.

Buying a policy is "rational" only when the probability of losing money is low and the size of the potential loss is high, Dr Finke said.

"It's a good strategy to make sure that you let the small ones go so you can focus on insuring bigger losses."

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