Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

 

 

Borrow

Coughing up $49.5m for dodgy consumer credit practices

  • May 13 2020
  • Share

Borrow

Coughing up $49.5m for dodgy consumer credit practices

By Grace Ormsby
May 13 2020

The Federal Court has approved of a $49.5 million class action settlement that related to NAB and MLC’s sale of consumer credit insurance (CCI) to vulnerable customers.

Federal Court

Coughing up $49.5m for dodgy consumer credit practices

author image
  • May 13 2020
  • Share

The Federal Court has approved of a $49.5 million class action settlement that related to NAB and MLC’s sale of consumer credit insurance (CCI) to vulnerable customers.

Federal Court

The action was first brought against NAB and MLC Ltd by Slater and Gordon in September 2018 and concerned allegations of “unconscionable conduct”. 

NAB and MLC were reported to have engaged in contravention of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) by selling insurance to cardholders who were “ineligible to claim under the terms of the policy”.

At the time the class action was filed, Slater and Gordon said all claimants had a NAB credit card and were then offered credit card insurance.

“However, it was highly unlikely that they would benefit from this policy,” according to class actions principal lawyer Andrew Paull.

Advertisement
Advertisement

Ineligible customers that were sold the insurance included students, those without gainful employment, and individuals on disability pensions.

Mr Paull had also alleged that some customers with existing life and/or income protection insurance were still encouraged to take out insurance on their credit card, despite already being covered by their existing policies.

He had commented that “both NAB and MLC were in much stronger bargaining positions than any of the people they were contacting and selling this insurance to”.

The proceedings were related to two CCI products: NAB Credit Card Cover (NCCC) and NAB Personal Loan Cover (PLC).

In acknowledging the Federal Court’s approval of the settlement, NAB noted it no longer sells CCI products.

Responding to the announcement, the bank’s chief legal and commercial counsel, Sharon Cook, said: “We are pleased with the Federal Court’s decision and to be able to resolve this matter for our customers and shareholders.

“As we have acknowledged, it is important to resolve past issues so that we can rebuild trust with our customers and the community.”

Coughing up $49.5m for dodgy consumer credit practices
Federal Court
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

more on this topic

more on this topic

From the web

Recommended by Spike Native Network

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.