Brought to you by:
CGU
CGU

NAB capitulates: bank agrees to pay $50m CCI award

Facebook Twitter LinkedIn Google

The Hayne royal commission has notched up a class action win for the first time after NAB agreed to pay $49.5 million to settle a group claim over “junk” credit card and personal loan insurance.

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

Brought against NAB and MLC Limited by Slater & Gordon, proceedings were filed in the Federal Court in September last year on behalf of customers inappropriately sold credit card insurance. In June, the court agreed the claim could be expanded to include personal loan insurance.

“A $49.5 million settlement is a terrific result for tens of thousands of people,” Slater and Gordon Practice Group Leader Andrew Paull said.

The law firm, which acted on a “no win, no fee” basis, was “extremely proud to have settled the first consumer class action arising out of the banking royal commission,” he said.

Mr Paull had accused NAB, which no longer sells CCI, of “using pushy tactics and pressuring vulnerable customers into buying worthless insurance” the bank knew was wrong.

“They did it anyway, and collected millions of dollars in unwarranted premiums in the process.”

A Slater and Gordon spokesperson told insuranceNEWS today that as details of the large settlement emerged, the law firm was contacted by thousands more Australians on Wednesday night who had bought CCI from NAB and wanted to be part of the class action.

Australians who paid premiums for NAB Credit Card Cover after September 26, 2012 and/or paid a premium for NAB Personal Loan Cover after June 14, 2013, and meet certain other criteria, are eligible to join the class action.

The firm expects as many as 100,000 eligible customers may join the class action and receive compensation.

The NAB proceedings come as the Australian Securities and Investments Commission (ASIC) stages a crackdown on the mis-selling of poor-value and worthless products.

“The settlement is the right thing to do for our customers and shareholders,” NAB Chief Legal and Commercial Counsel Sharon Cook said. “We can only move forward if we deal with the past, so that we can earn trust among customers and the broader community and grow confidence in the future of NAB.”

NAB, which already provided for the $49.5 million payout in its full year financial statements in September, no longer sells CCI, and Allianz Australia also ceased selling it after agreeing to refund more than $8 million more for 15,000 consumers who bought the product from 2011 to the end of last year.

The class action alleged NAB engaged in unconscionable, misleading and deceptive conduct. NAB and MLC sold CCI to people who were ineligible to claim under the terms of the policy, or were otherwise unlikely to benefit. Some customers were not informed it was optional.