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Coughing up $49.5m for dodgy consumer credit practices
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.
Coughing up $49.5m for dodgy consumer credit practices
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.
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.
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.”
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