$49.5m NAB class action insurance settlement approved
The Federal Court has approved a $49.5 million settlement over a class action brought against NAB and insurance company MLC Limited regarding credit card and personal loan insurance.
The settlement – first announced in November 2019 – on Friday received the official approval from the Federal Court, paving the way for customers to start receiving settlement payments from June.
More than 50,000 people registered to receive their share of the $49.5 million settlement.
“Today’s settlement is a terrific result for NAB customers,” Slater and Gordon practice group leader Andrew Paull said.
The class action, taken by law firm Slater and Gordon in the Federal Court, alleged NAB and subsidiary MLC engaged in unconscionable conduct in selling consumer credit insurance (CCI) to customers.
They included pensioners, casual workers, and unemployed and critically ill people who were ineligible to claim or unlikely to benefit from the policies.
It was also alleged NAB engaged in misleading and deceptive conduct when selling the insurance.
Mr Paull said the policies were “next to worthless” to many of the people they were sold to.
He said the settlement was the largest amount that had ever been paid by a big four bank to its customers as a result of a class action.
Mr Paull said the amount of compensation individual customers could expect to receive would depend on how much they paid in premiums, which ranged from hundreds to more than a thousand dollars a year.
“Those amounts are very significant for the types of people who are participating in this action,” he said.
“For a person who is unemployed, for a person living on the disability pension, a few hundred dollars a year or a thousand dollars a year makes a very big difference.”
It is estimated about 400,000 people were sold the insurances policies under scrutiny, but the compensation payments will be limited to pensioners, students, and unemployed.
NAB chief legal and commercial counsel Sharon Cook said: “The settlement is the right thing to do for our customers and shareholders.”
“As we have said, we can only move forward if we deal with the past, so that we can earn trust among customers and the broader community and grow confidence in the future of NAB.
“It is important to note NAB no longer sells CCI products through any of its banking channels, and has implemented a remediation program for CCI customers.”
NAB and MLC Limited settled the class action without admission of liability. Slater and Gordon has commenced class actions raising similar allegations in relation to credit insurance policies sold by Westpac, ANZ and the Commonwealth Bank. Those cases remain on foot.