Three of Australia’s four ‘big banks’ have agreed to pay millions in settlements to customers after they were sold junk insurance policies.
ANZ, Westpac and Commonwealth Bank (CBA) have agreed to pay a combined $126 million settlement to plaintiffs in a class action brought by customers asserting they were sold insurance either against their wishes, or under false pretenses.
When you apply for a credit card or loan, insurance and loan protection policies are often offered alongside the credit application.
Lawyers for the plaintiffs, Slater and Gordon, said in a statement that these banks were offering insurance policies to customers who were unlikely to be able to make a claim because they were unemployed or had pre-existing health conditions or disabilities.
They allege that some customers never provided consent to purchase the policies, were not informed that the insurance was optional, or were not told they would be charged for it.
Without admitting any guilt, CBA has agreed to pay $50 million, ANZ has agreed to $42 million and Westpac $29 million.
The court action follows similar proceedings against National Australia Bank (NAB) in 2019, which resulted in a $49.5 million settlement for around 50,000 customers.
Alex Blennerhassett, class action senior associate at Slater and Gordon, says group actions such as this are an avenue for everyday people to fight back against corporate giants they feel have wronged them.
“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.
Tracey Reilly, lead plaintiff in the proceedings against ANZ, says she was sold ANZ Credit Card Protection policies without her consent.
After holding the card for a few years (and paying the premiums), Ms Reilly was diagnosed with an illness and subsequently could not make her credit card repayments. She tried to set up a payment plan with the bank, but says she was advised by ANZ that she had income protection insurance on her card and could make a claim.
But when she did make the claim, she was told she was ineligible to claim because she had a pre-existing medical condition.
“I’m glad this has been completed with a great result,” Ms Reilly says.
“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.”
Kristy Fordham, lead plaintiff against CBA, told a similar story. Ms Fordham says she was sold loan protection insurance by CBA without requesting it.
At the time of the application, she was unemployed and had been diagnosed with chronic fatigue syndrome and fibromyalgia – pre-existing conditions that made her ineligible to make a claim.
Ms Fordham says she was told by a CBA employee that if she didn’t take out the policy, there was no guarantee she would be approved for the loan. She also claims she was never informed she wouldn’t be able to claim.
“I believe the bank knew full well that we couldn’t benefit from their products, but they deliberately sold them to us anyway,” she says.
“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.”
Do you hold a consumer credit insurance policy with any of these banks? Are you eligible for any of the settlement money? Let us know in the comments section below.