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Class action filed against ANZ and Westpac over junk insurance
Two class actions against ANZ and Westpac have been filed in the Federal Court on Friday morning, alleging the banks sold worthless insurance.
Naomi Neilson
Slater and Gordon filed both class actions based on claims of unconscionable conduct, inappropriate advice, misleading or deceptive conduct and unjust enrichment. It comes only months after the firm settled with NAB for $49.5 million.
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The class action relates to consumer credit insurance which was added to credit cards and personal loans insured by ANZ and Westpac. The firm has alleged the insurance policies provided little or no benefit to the bank’s customers, but generated hundreds of millions of dollars in revenue for the banks and insurers.
It is also alleged the banks added insurance to customers’ loans and credit cards but did so without their consent or without them being told it was optional.
Slater and Gordon practice group leader Andrew Paull said: “For too long, banks have abused their power by selling junk insurance products, adding thousands to customers credit card bills or personal loan repayments while providing little or no benefits.”
Both banks stopped selling “junk insurance” last year when ASIC outright banned the practice of cold calling potential customers. Mr Paull said these are welcome changes but not enough has been done to compensate the victims of “predatory” sale tactics.
“The customers we’ve spoken with trusted the big banks,” said Mr Paull, adding they continue to be out of pocket after being pressured with the worthless insurance cover.
“Many people who were sold the insurance had disabilities, were unemployed or were critically ill, and therefore not eligible to claim on the policies. Others were led to believe the insurance they bought was free or mandatory. Neither was the case,” he said.
Slater and Gordon said the banks enjoyed extraordinarily profit margins on these junk products. Between 2011 and 2018, ANZ paid out claims totally just 6.9 cents for every dollar they collected in credit card insurance payments. In comparison, motor vehicle insurance pays out approximately 85 cents for every dollar of premiums.
