Major banks agree to payouts in insurance class action lawsuit

Major banks agree to payouts in insurance class action lawsuit | Insurance Business Australia

Major banks agree to payouts in insurance class action lawsuit

Banking and insurance giants ANZ, Westpac, and the Commonwealth Bank of Australia (CBA or CommBank) will compensate up to one million customers in Australia after a massive class action lawsuit reached judgment.

This week, law firm Slater and Gordon reached $126 million in settlements with ANZ, Westpac, and CBA to compensate their customers for consumer credit insurance they were sold while taking out credit cards and personal loans.

According to 7news.com.au, the law firm stated that many customers who were sold consumer credit insurance were unlikely to or may have been ineligible to make a claim due to unemployment or pre-existing health conditions or disabilities when they purchased the coverage. Additionally, some customers never consented to buy the insurance policy, while others were not informed that they would be charged for it.

Kristy Fordham, a single mother-of-four in Queensland and the lead plaintiff in the CBA proceedings, said she was sold the insurance policy without being asked, despite having been diagnosed with severe health conditions, including chronic fatigue syndrome and fibromyalgia, making her ineligible to claim the policy's main benefits.

“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,” she said, as reported by 7news.com.au. “It was behaviour that they made a lot of money from, so it's about time those of us affected get compensated.”

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The agreement, still subject to court approval, means affected CBA customers will receive a share in the $50 million compensation from the bank and its insurer Colonial Mutual Life Assurance Society Limited.

A CBA spokesperson said the class action revolved around consumer credit insurance for credit cards and personal loans sold between January 1, 2010, and March 7, 2018. Once the court approves the $50 million in settlement, members may register for the settlement distribution scheme.

“The settlement distribution scheme will determine if individual group members are entitled to recover a share of the settlement sum, after accounting for any deductions which may be approved by the court, such as legal fees charged by the applicant’s lawyers,” the CBA spokesperson said, as reported by 7news.com.au.

Meanwhile, ANZ and insurers OnePath Life, OnePath General Insurance, Zurich, and QBE agreed to pay out $47 million. Lastly, Westpac and insurers Westpac Life Insurance and Westpac General Insurance agreed to $29 million in settlement.

ANZ confirmed that the class action against it was brought up in 2020.

“ANZ will contribute $42 million to the settlement, which is covered by provision held on September 30, 2022. The settlement is without admission of liability and remains subject to court approval,” it said, as reported by 7news.com.au.

Meanwhile, Westpac said the class action lawsuit revolved around policy sales before 2019, adding: “Westpac has not sold consumer credit insurance products since 2019.”