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Super fund hit with class action over income protection premiums  

Shine Lawyers has launched class action proceedings in the Federal Court against Rest Superannuation, alleging the fund wrongfully deducted income protection premiums from members’ accounts.

Practice Leader Hadi Boustani says up to 500,000 Rest members may be affected.

“This class action alleges that between December 2008 and June 2019, Rest Superannuation signed up new members to income protection insurance by default, without the member actively choosing to sign up to the policy,” he said.

“We also claim that when members did not make any contribution to their Rest account for 13 continuous months or more, the default income protection insurance policy did not provide the member with any coverage, and when members held multiple income protection insurance policies at the same time, the Rest income protection policy provided little to no coverage.

“This was money down the drain for fund members who paid a premium for no benefit. As a result, we’re seeking compensation for insurance premiums which we allege were unfairly deducted, as well as investment returns and administration costs.”

A spokesperson for Rest says the fund intends to defend the class action.

“As a profit-to-member fund, Rest has at all times focused on the best financial interests of members. Rest’s group insurance cover is and has always been designed to meet the needs of our members,” the spokesperson told insuranceNEWS.com.au on Friday.

“Offering default income protection cover to Rest members is a highly valuable benefit and supports members who are unable to work due to illness or injury. Many Rest members work part-time and would not be able to obtain income protection cover by any other means or at a reasonable cost.”

Rest says last financial year the fund paid out about $222 million in benefits across more than 10,000 income protection claims.