A $100 million class action has been filed against Westpac Banking Corporation, alleging bank life insurance customers pay higher premiums than on similar policies sold via the independent channel.

BT Financial Group, the Westpac subsidiary that sells life cover, has vowed to fight the allegations.

“We stand by our life insurance product, which is consistently among the highest-rated in the market, and we have a great track record of paying claims,” BT CEO Brad Cooper said.

“Our commitment is to make sure our customers have the best possible cover and service at the most sustainable price.”

Shine Lawyers instigated the class action last Thursday on behalf of clients, naming Westpac Banking Corporation as first respondent and Westpac Life Insurance Services as second respondent.

The clients have bought Westpac Life-issued policies on the recommendation of financial advisers from Westpac subsidiaries BT Advice, St George Financial Planning, Bank of Melbourne Financial Planning or BankSA.

“We believe Westpac took advantage of its relationships with customers to boost its bottom line by signing clients up to its own in-house insurance, which it knew was more expensive,” Shine Lawyers Class Actions Special Counsel Jan Saddler said.

“The bank and its financial planners have an obligation to act in the best interests of their clients. In this case Westpac has abused its powers and the trust of customers.”

Shine says tens of thousands of customers may have been overcharged since 2010 and the class action could total $100 million.

The lawsuit’s statement of claim, filed last week in the Federal Court, says premiums on the policies are about 4.5% higher than identical covers sold by independent financial advisers.