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Big banks caught up in new junk insurance class actions
Two new class actions have been filed in the Federal Court today on behalf of customers sold junk insurance by ANZ and Westpac.
Big banks caught up in new junk insurance class actions
Two new class actions have been filed in the Federal Court today on behalf of customers sold junk insurance by ANZ and Westpac.
Slater and Gordon announced it has filed the actions, based on claims of unconscionable conduct, inappropriate advice, misleading or deceptive conduct and unjust enrichment.
nestegg first reported on the firm’s intention to go after the banks on the issue of junk insurance in November 2019.
The class actions relate to consumer credit insurance added to credit cards and personal loans issued by ANZ and Westpac.
It is alleged that the added-on insurance policies provided consumers with little or no benefit, but generated “hundreds of millions of dollars” in revenue for the banks and insurers.
Slater and Gordon is also alleging that the insurance was added on to customers’ loans and credit cards without the consent of customers or without them being told it was optional.
Commenting on the lawsuits, Slater and Gordon practice group leader Andrew Paull has said that, “for too long, banks have abused their power by selling junk insurance products, adding thousands to their customers’ credit card bills or personal loan repayments while providing little or no benefits to the customer”.
ANZ and Westpac stopped selling junk insurance last year, while ASIC recently placed an outright ban on the practice of cold calling potential customers.
While Mr Paull called these actions “welcome developments”, he still considered that “not enough has been done to compensate the past victims of these predatory sales tactics”.
“The customers we’ve spoken with trusted the big banks. They were ripped off and continue to be out of pocket after being pressured to sign up to worthless insurance cover,” Mr Paull said.
He highlighted how many people who were sold the insurance had disabilities, were unemployed or were critically ill.
This meant they would not have been eligible to claim on the policies anyway.
“Others were led to believe the insurance they bought was free, or mandatory,” he continued.
“Neither was the case.”
Mr Paull outlined that the banks “enjoyed extraordinary profit margins on these products”.
“Between 2011 and 2018, ANZ paid out claims totaling just 6.9 cents for every dollar they collected in credit card insurance premiums,” he stated.
In comparison, motor vehicle insurance pays out approximately 85 cents for every dollar of premiums.
Anyone who has purchased ANZ Credit Card Insurance, ANZ Personal Loan Protection, Westpac Credit Card Repayment Protection, Westpac Flexi Loan Repayment Protection or Westpac Personal Loan Protection since 2010 may be eligible for inclusion in the class action, with Slater and Gordon encouraging potential victims to head to its website for more information.
Both consumer credit class actions will be run on a no win, no fee basis.
Slater and Gordon has previously settled a similar case with NAB for $49.5 million after it was revealed nearly half a million Australians were affected by the bank’s junk credit policies.
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