Three of the nation’s biggest banks and their insurers have reached settlements with law firm Slater & Gordon worth more than $126 million as part of a class action into the sale of alleged ‘junk’ credit insurance.
The settlements, which are without admission of any wrongdoing from the banks, are expected to result in up to one million customers of Commonwealth Bank (ASX: CBA), ANZ (ASX: ANZ) and Westpac (ASX: WBC) being eligible to receive compensation for consumer credit insurance (CCI) they were sold.
The sale of the CCI products to customers meant many were ineligible or unlikely to make a claim because they were already unemployed or had pre-existing health conditions or disabilities when taking out the insurance.
Slater & Gordon said some customers may have never provided their consent to purchase the policies, were not informed that the insurance was optional and/or were not told they would be charged for it.
When the class actions were launched in 2020, Slater & Gordon alleged the insurance policies provided little or no benefit to customers, but ‘generated hundreds of millions of dollars in revenues for the banks and insurers’.
Class actions senior associate Alex Blennerhassett said the settlements, which are subject to court approval, would see customers receive a share of the following settlements:
- CBA and insurer Colonial Mutual Life Assurance Society Limited: $50 million
- ANZ and insurers OnePath Life, OnePath General Insurance, Zurich, QBE: $47 million
- Westpac and insurers Westpac Life Insurance and Westpac General Insurance: $29 million
“Taking on the big banks was never going to be easy but we are pleased that we have been able to resolve these group proceedings and that eligible customers will benefit,” Blennerhassett said.
“Class actions are one way people can take on big corporations, including Australia’s Big Four banks.”
While CBA and Westpac are yet to comment, ANZ said its settlement would be covered by a provision held at 30 September 2022.
Lead plaintiff in the ANZ proceedings Tracey Reilly was sold ANZ credit card protection policies without consenting, and said she began to experience financial difficulties years later after being diagnosed with a rare form of cancer that impacted her ability to work.
She approached staff at an ANZ branch about entering a payment plan with them when she was advised that she had credit card insurance with the bank. But when she tried to make a claim, she was told she was ineligible because she had pre-existing symptoms that were later diagnosed as cancer.
Reilly said she was glad the class action had resulted in a positive outcome for customers like her.
“I’m glad this has been completed with a great result,” she said.
“Now at least people can have a portion of what they paid returned to them, as some people are going through a rough financial time, so every dollar will help.”
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