Junk insurance class actions claim another bank

By Grace Ormsby

June 10 2020
Share

Another major bank is in the junk insurance firing line, with the filing of yet another class action on the matter in the Federal Court.

Slater and Gordon has filed the lawsuit against the Commonwealth Bank of Australia for selling customers junk credit card and personal loan insurance, alleging the insurance it did provide was “junk”.

According to the firm, which is running the class action no win, no fee, the Commonwealth Bank has previously admitted that these products were worthless, despite being sold to hundreds of thousands of CBA customers.

Slater and Gordon highlighted that during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the bank’s current CEO, Matt Comyn, had pushed for junk insurance to be desisted back in 2015.

The then CEO had told Mr Comyn to “temper [his] sense of justice”, and the products continued to be sold until March 2018, with existing policies still rolling over.

Consumers who purchased either Credit Card Plus or Personal Loan Insurance and have paid a premium since 2010 may be included in the class action.

Slater and Gordon practice group leader Andrew Paull has flagged that “a 2018 review of the Commonwealth Bank’s sale of consumer credit insurance products revealed that more than 200,000 people who were unemployed or not working full-time had been sold this type of policy, meaning it was very unlikely they would have been able to claim against the insurance”.

He said he hopes the class action will lead to customers getting their money back, and ensure the bank is held accountable for its wrongdoing.

“This is reprehensible behaviour by the bank, which has chosen to compensate only a negligible portion of its customers, despite their admission that they knew the insurance was worthless,” Mr Paull commented.

According to Mr Paull, “this move to return only a small portion of its customers’ premiums seems to have been a tokenistic effort to protect the bank’s brand, rather than a genuine attempt to make good its past wrongdoing”.

The lawyer has called on the Commonwealth Bank to do the right thing, and properly address the claims brought in this class action by ensuring that all aggrieved customers are compensated.

It comes just days after the bank was ordered to pay a $5 million penalty for failing customers of the AgriAdvantage Plus package.

The new class action also comes after the Federal Court agreed to a $49.5 million class action settlement between NAB and Slater and Gordon that was related to its sale of consumer credit insurance to vulnerable customers.

Did you enjoy this article? You may also be interested in:

About the author

Grace Ormsby

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 Ormsby

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.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Rest super fund reports 11.19 per cent return for 2024

Resources

There is $17.5 billion in lost and unclaimed super across ...

Borrow