Leading class action law firm Slater and Gordon has reached settlements worth more than $126 million with the nation’s biggest banks and their insurers over consumer credit insurance customers were sold when taking out credit cards and personal loans.
The three settlements, which are all subject to court approval, are expected to result in up to a million Commonwealth Bank (CBA), ANZ and Westpac customers being eligible to receive compensation for consumer credit insurance (CCI) they were sold.
Many customers may have been ineligible or were unlikely to be able to make a claim because they were already unemployed or had pre-existing health conditions or disabilities when they took out the insurance. Some may have never provided their consent to purchase the policies, were not informed that the insurance was optional and/or were not informed that they would be charged for it.
During the Banking Royal Commission, Slater and Gordon also initiated a class action against NAB and MLC over its CCI policies on behalf of 50,000 customers. A $49.5 million settlement was reached in November 2019.
Slater and Gordon Class Actions Senior Associate Alex Blennerhassett said the settlements, which were without admission of any wrongdoing, meant affected CBA, ANZ and Westpac customers would receive a share of the following settlements:
Bank | Insurer/s | Settlement amount |
CBA | Colonial Mutual Life Assurance Society Limited | $50 million |
ANZ | OnePath Life, OnePath General Insurance, Zurich, QBE | $47 million |
Westpac | Westpac Life Insurance, Westpac General Insurance | $29 million |
Total | $126 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,” Ms Blennerhassett said.
“Class actions are one way people can take on big corporations, including Australia’s Big Four banks.”
Ms Blennerhassett said all of the firm’s CCI class actions were run on a No Win, No Fee basis, meaning group members paid nothing up-front to join.
Lead plaintiff in the CBA proceedings Kristy Fordham, from Queensland, was sold Loan Protection by the CBA without requesting it. At the time, she was a single mother of four children, was not working and had been diagnosed with serious health conditions including chronic fatigue syndrome and fibromyalgia. This deemed her ineligible to claim the main benefits of the policy.
She was told by a bank employee that if she did not take out the policy, which cost $25-a-month, there was no guarantee the loan would be approved. At no stage was she advised that she was ineligible to make a claim. It was not until she was informed by the bank in late 2020 that she may have been paying for loan protection insurance that did not cover her that she discovered she was ineligible. She cancelled the policy.
Ms Fordham welcomed the settlement and said she was glad the legal fight was finally over.
“I believe the bank knew full well that we couldn’t benefit from their products, but they deliberately sold them to us anyway,” she said. “We were all so vulnerable or else we wouldn’t have needed loans from them in the first place, yet they took advantage of that, in my opinion. It was behaviour that they made a lot of money from, so it’s about time those of us affected get compensated.”
Lead plaintiff in the ANZ proceedings Tracey Reilly, from Chermside, Queensland, was sold ANZ Credit Card Protection policies without consenting. She began experiencing financial difficulties several years later after she was 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.
She said she was glad the class action had resulted in a good outcome for customers.
“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.”
Lead plaintiff in the Westpac proceedings Roger Kemp, from Mindarie, Western Australia, cannot recall taking out his Flexi Loan Repayment Protection insurance and already had life, terminal illness and TPD cover through his superannuation policy.
Soon after taking out the bank loan, Roger and his family experienced unexpected medical and financial difficulties, including the premature birth of his daughter, and the non-renewal of his employment contract once it ended. In addition to being unaware he had the insurance policy, Mr Kemp would have been ineligible to make a claim for the non-renewal of his employment contract because of the policy’s exclusions regarding contract workers.
“Many people are affected by the outcome in these group proceedings as many held CCI policies. I believe that my story pales compared to what some other people were going through,” he said.
“It would have been impossible for me to take on this claim on my own, so I’m grateful to have been able to join forces through this class action with so many other people.”
Bank customers eligible for a share in the settlements will be contacted in due course by Slater and Gordon. They do not need to contact the firm.
