I was recently asked to assist a 19 year old woman whose bank savings account was $150 overdrawn.  Impossible I thought: she did not have a credit card and had not borrowed any money. 

What had occurred was that 1 month after opening a bank savings account (with a major bank) to deposit her income of $60 per week from her part-time casual job at a local cafe she had received an unsolicited call from the bank’s insurance division and she agreed “to talk to them about insurance”.  By the end of the call she had been persuaded (or coerced?) into signing up for a life insurance policy costing $45 per month with the premiums being direct debited to her savings account.  This was a young financially inexperienced university student with no assets, no dependents (not even a pet cat!) and no permanent income being persuaded to spend 17% of her earnings on insurance which provided her with absolutely no benefit.

Ultimately we were able to get the matter resolved but it required a visit to the local branch of the bank (where the staff were very helpful).  They helped us make a phone call to the insurance division.  At first they obfuscated and said they needed the involvement of a senior manager to deal with the complaint.  The clincher was when I asked to see a copy of the financial needs analysis they had conducted on their client before providing the insurance advice.  This resulted in rapid agreement to cancel the policy and when I made it clear that that was not good enough they eventually agreed to refund all the premiums back to the commencement of the policy. 

So a $150 deficit became a $350 balance. 

So although this particular situation ended with a neutral outcome (i.e it did not cost her any money) it does beg the question:  how many others are out there who have been caught in a similar scam who have not had the courage or support to take this sort of remedial action?