Shine Lawyers has begun class action proceedings against Aussie Home Loans, alleging the mortgage broker sold junk insurance to thousands of customers.

People were misled into buying loan protection products – Mortgage Protection Plan or My Protection Plan – that offered little to no value, the law firm says.

“The policy promised mortgage-holders assistance for home loan repayments in the event of illness or injury, loss of employment or death,” Class Actions Practice Leader Kione Johnson said. “We allege it was an unnecessary expense given most customers may have already held life insurance policies that offered them this security and coverage, and/or because Aussie’s policy only provided cover in a limited range of circumstances.”

The law firm says the Federal Court action will examine whether Aussie Loans brokers who sold the policies breached their duty to act in a customer’s best interests, and whether selling the insurance amounted to misleading or deceptive conduct. 

The class action represents customers who bought the insurance from February 28 2018.

Aussie Home Loans says it is reviewing details of the class action.

“We are aware of a class action involving aspects of an insurance product, although we do not issue insurance ourselves. [We] connect consumers with a wide range of financial products through our approved panel of providers,” a spokesperson told insuranceNEWS.com.au.