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Editor’s note: This article originally appeared on Lawyers Weekly’s sister brand, Broker Daily.
A class action lawsuit was filed in the Federal Court of Australia against Aussie Home Loans in 2024, alleging that borrowers were misled into purchasing a Mortgage Protection Plan or My Protection Plan policies.
These policies, which offered assistance with mortgage repayments in case of illness, injury, or death, were allegedly sold without adequate consideration for the borrowers’ best interests and may have been unnecessary, given existing life insurance coverage.
The class action claimed that Aussie Home Loans brokers breached their duties by failing to act in their clients’ best interests, giving priority to their own, and providing misleading or deceptive advice.
Shine Lawyers filed the class action in the Federal Court on behalf of around 30,000 mortgage holders who purchased a Mortgage Protection Plan or My Protection Plan policy from Aussie Home Loans from 28 February 2018 onwards.
Aussie Home Loans parent company Lendi Group and insurer ALI Group attempted to declass the case at a hearing at the Federal Court of Australia on 3 June, meaning the group of plaintiffs will no longer have the benefits of proceeding as a class and instead would likely have to pursue individual claims.
The defendant’s reasoning behind declassing is the unique circumstances of each consumer affected and the 1,400 brokers involved.
Following the hearing, a Lendi Group spokesperson said to Broker Daily: “Lendi Group, presented our application to declass the proceedings. We respect the legal process and await the court’s decision.”
According to a spokesperson at Shine Lawyers, the weight of the outcome of the class action is massive and a declassing could result in consumers receiving no compensation.
Shine Lawyers described the battle as an “all-or-nothing gamble.”
“Without this class action, these individuals would get nothing, and big businesses like Aussie can continue to sell products alleged to be unsuitable and uncompetitive. We are fighting for policyholders who would have few alternatives to pursue their claims if this case is de-classed,” said the spokesperson.
“This is an ‘all-or-nothing’ gamble that could result in thousands of policyholders missing out on potential compensation. Shine is fighting for those policyholders who would have few alternatives to pursue their claims if this case is de-classed. Without this class action, thousands of people would get nothing, and big businesses like Aussie can continue to sell products alleged to be unsuitable and uncompetitive.”
At the hearing, the plaintiff Jeremy Stoljar alleged customers “felt pressured into buying the policy and was subject to unfair sales tactics” and were told it was compulsory to take out insurance with loans.
Stoljar described the policy as “illegal” and “junk insurance policy”, calling on no declassing to protect the individuals affected.
Fingers were pointed at brokers for recommending this policy.
“The recommendation came from the broker to buy these products. Who else did it come from? And the customer went ahead with them, and no other product was on offer, and we say the product was simply unsuitable for that customer because it conferred no benefit on that customer,” said Stoljar.
The argument was made that if the case was declassed, those affected would have “great difficulty affording” to pursue individual claims.
“They won’t be able to marshal the evidence that they want to marshal, and it just won’t be a practical way to run the case effectively,” Stoljar said.
“Where does that leave us? Well, the likelihood is that a lot of individuals won’t bring claims at all because it just might not be feasible.”
According to Shine Lawyers, Aussie continues to sell these policies to customers.
“The policy promised mortgage-holders assistance for home loan repayments in the event of illness or injury, loss of employment or death. We allege it was an unnecessary expense given most customers may have already held life-insurance policies that offered them this security and coverage, and/or because Aussie’s policy only provided cover in a limited range of circumstances,” said Shine Lawyers’ class actions practice leader, Kione Johnson.
Rumours of a potential class action lawsuit circulated in September 2022.
Aussie responded to the claims at the time: “While our Aussie brokers assist thousands of customers to understand their home loan journey through an approved panel of lenders, we do not sell insurance ourselves. Aussie have not received any legal correspondence relating to these particular claims.”