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Westpac, ANZ face class action over 'junk' insurance sales

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Plaintiff law firm Slater and Gordon has filed separate class actions against ANZ and Westpac, accusing the two banks of ripping off vulnerable consumers who were sold “junk” consumer credit insurance (CCI) products.

Westpac has confirmed receiving the class action papers and says it will be contesting the allegations in the Federal Court, where the lawsuits were filed last Friday.

“Westpac takes its customer obligations seriously and will be defending the claims,” the bank says in a statement to the ASX. “The damages sought by the claim are unspecified.”

ANZ declined to comment when contacted by insuranceNEWS.com.au.

The Big Four Australian banks including ANZ and Westpac stopped selling CCI last year after it came to light that the products provided little to no value, and that pressure tactics were often used to hawk these policies to consumers who can least afford to buy it.

“Many people who were sold the insurance had disabilities, were unemployed, or were critically ill, and therefore not eligible to claim on the policies,” Slater and Gordon Practice Group Leader Andrew Paull said.

“Others were led to believe the insurance they bought was free, or mandatory. Neither was the case.”

The class actions allege the two banks sold the CCI products by adding them to customers’ personal loans and credit cards without their consent, or by failing to inform them it was optional.

Slater and Gordon filed a similar suit against NAB and secured a victory when the bank agreed to pay $49.5 million to settle the claim.

A report by the Australian Securities and Investments Commission found CCI products offered extremely poor value, with policyholders getting back an average 11 cents for every dollar paid in premiums for CCI with credit cards.