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Class action on ‘worthless’ CCI extends with ASIC report
Slater and Gordon is encouraging NAB customers who were sold “junk” credit card insurance to sign up to its class action after a damning ASIC report found a culture of “unfair” tactics.
Naomi Neilson
Source: slatergordon.com.au/people/andrew-paull
Plaintiff firm Slaters issued the class action in 2018 on the back of the banking royal commission, alleging that NAB and MLC engaged in “unconscionable conduct” when they sold “dodgy” and “worthless” CCI to vulnerable customers.
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This has been strengthened by a recent ASIC report, which argued the CCI was “poor value for money”.
In conversation with Lawyers Weekly, Slater and Gordon practice group leader Andrew Paull agreed, adding CCI was “of almost no value” to customers.
“The claims are bought against specified groups of people, and the clearest cohort are people who were sold this product and yet were ineligible to claim on the benefits,” Mr Paull said.
“What we’ve learnt from the work that we’ve done on this case is that even at an industry-wide level, these products are of very low value to customers.”
Slater and Gordon is seeking the repayment of the premiums paid by customers over the period of the class action and any interest acquired.
ASIC’s report found customers received only 11 cents in claims for every dollar paid in premiums. Across all CCI products, only 19 cents were recovered in claims for every premium dollar that consumers paid, which was “extremely” poor value.
In addition to selling CCI to customers that were ineligible under their policy, ASIC and Slater and Gordon are arguing that telephone sales staff were using “unfair” and “high-pressure” tactics to sell the products.
Additionally, it is alleged that CCI customers were given “non-compliant personal advice to buy unsuitable policies”.
ASIC commissioner Sean Hughes said: “We are deeply troubled by the findings in our report, and the stories they tell of unfair practices occurring within Australia’s largest and most well-known financial institutions. Lenders and insurers have had more than enough time to improve sales practices and provide better value for consumers.”
Mr Paull agreed, adding that senior employees “have no excuse for not knowing”.
“ASIC first started investigating this issue and reporting on this issue in 2011, so they were on notice that it was a big problem,” Mr Paull said.
“NAB has also been exposed to very similar issues in the UK… they ought to have done more to ensure people were not mis-sold a product that was clearly inappropriate for them.”
Mr Paull said that since Slater and Gordon’s investigation began, he has been inundated with enquiries from customers affected by the CCI scheme, especially those that did not realise they were sold the product until they checked their statements, did not know the product was optional and were unaware that they were ineligible for it.
ASIC’s work has led to a “significant remediation” program expected to exceed $100 million paid to over 300,000 customers. Currently, over $51 million has been paid to over 186,000 customers, and ASIC’s work to secure further compensation continues.
Mr Paull said the royal commission and the reports have been big for the industry, but he is confident Slater and Gordon would have pursued the class action regardless.
“We were looking at this issue even before the royal commission, and I think it’s likely that we would have taken action regardless of those regulatory events, but certainly it has been a real wake-up call to the financial services industry.”
