The aftermath of Australia’s major lenders selling near-worthless insurance over many years has deepened, with ANZ and Westpac hit by new class actions just days after NAB agreed to almost $50 million in compensation to customers.

Slater and Gordon alleges the banks sold “junk” Consumer Credit Insurance (CCI) to “potentially hundreds of thousands of unsuspecting, vulnerable customers”.

The law firm was contacted by Westpac and ANZ CCI customers this week after news emerged NAB has coughed up $49.5 million to settle a class action, brought against it by Slater and Gordon on a “no win, no pay” basis, in September last year.

“Banks have been abusing 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,” Slater and Gordon Practice Group Leader Andrew Paull said.

“Customers who trusted the big banks were ripped off and continue to be out of pocket after being pressured to sign up to worthless insurance cover,” Mr Paull said.

The latest legal proceedings come as the Australian Securities and Investments Commission (ASIC) stages a crackdown on the mis-selling of poor-value and worthless insurance products. Sellers of CCI have raked in $1.78 billion in premiums in Australia over the last 8 years, but returned only 11% of that in claims, ASIC found. Car insurance, in contrast, carried an average pay rate of 89 cents in the dollar.

Since 2011, ANZ’s credit card cover has underperformed even those meagre industry-wide returns, with a CCI payout rate of less than 7 cents in every dollar of premium earned. Westpac’s CCI returned less than 12 cents in the dollar.

Slater and Gordon says those figures demonstrate why CCI has been unusually profitable for banks and insurers, but extremely poor value for their customers.

“The consumer credit insurance class actions are part of a series of cases following from the banking royal commission which heard that banks were using pressure sales tactics to sell unnecessary credit card and personal loan insurance to customers who were ineligible to make claims under the policies,” Slater and Gordon said.

Many people who purchased CCI had disabilities, were unemployed or were critically ill, and were therefore not eligible to claim. Others were falsely led to believe the insurance they bought was free, or mandatory.

In August, 400,000 NAB customers were notified of the CCI class action in one of the largest court-ordered notices in Australia’s legal history.

A Slater and Gordon spokesman told insuranceNEWS.com.au that in the hours after NAB’s large settlement agreement was announced the law firm was contacted by thousands more Australians who had bought CCI from NAB wanting to be part of the class action. The firm expects as many as 100,000 eligible NAB customers may ultimately join and receive compensation.

All of the “big four” banks have stopped selling CCI. Allianz Australia also ceased selling it after refunding more than $8 million for 15,000 consumers who bought the product from 2011. In 2018, the Commonwealth Bank implemented a refund program in relation to its products.

Slater and Gordon is calling on Australians who believe they were miss-sold ANZ Credit Cover, ANZ Credit Cover Plus, ANZ Loan Protection, Westpac Credit Card Repayment Protection or Westpac Personal Loan Protection to make contact.