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Leading law firm Slater and Gordon has filed class action proceedings in the Federal Court against National Australia Bank and MLC on behalf of customers sold worthless credit card insurance.

Slater and Gordon Class Actions Principal Lawyer Andrew Paull said the action alleges MLC and NAB engaged in unconscionable conduct, in contravention of the Australian Securities and Investment Commission Act 2001 (Cth) (ASIC Act), by selling insurance to card holders who were ineligible to claim under the terms of the policy.

“All of the claimants had a NAB credit card and were then offered NAB credit card insurance,” Mr Paull said.

“However it was highly unlikely that they would benefit from this policy.

“Most were existing NAB customers and the bank should have known the insurance was likely to be of little or no benefit to them. Despite knowing this, NAB have continued to push the insurance widely, reaping millions in premiums while doing so.”

Mr Paull said most people were sold the insurance over the phone and were not given a reasonable opportunity to understand the terms and conditions of the policy.

“In the case of the life cover, the policy was of minimal value to many customers. NAB admitted as much in the Royal Commission.

“Both NAB and MLC were in much stronger bargaining positions than any of the people they were contacting and selling this insurance to.

“They have taken advantage of hundreds, potentially thousands of their loyal customers.”

Customers sold insurance included students and people without gainful employment, and people on disability pensions; all of whom were ineligible to claim the main benefits under the policy.

“Casual, contract or self-employed workers were subject to exclusions from the income protection coverage, but were not made aware of this fact when they agreed to purchase the insurance.

Jessica Purcell was a full time university student when she was pressured to take out consumer credit insurance, despite being a casual employee at the time and ineligible to claim certain aspects of the policy.

“It was sold to me like it was something that I had to take out. I honestly wouldn’t have thought twice about it if I hadn’t heard about the class action. I would have just kept paying it,” she said.

Customers with existing life and/or income protection insurance were also encouraged to take out insurance on their credit card, despite already being covered by their existing policies.

Mr Paull said Slater and Gordon believes these practices amount to unconscionable conduct in breach of section 12CB of the ASIC Act.

“We believe NAB’s and MLC’s conduct falls well short of the standard of behaviour the industry expects.

“In short they have taken advantage of people knowing that they can’t cover them.

“NAB and MLC have been fleecing consumers of millions and it’s only right that they pay it back.”

Which customers are included in the class action?

Group members include:

  • people who did not meet the employment criteria, eg. unemployed persons, casuals, students, seasonal workers, self-funded retirees, dependent spouses
  • people who were employed by their family
  • people who were self-employed
  • people with a pre-existing medical condition, or critical illness
  • people who were otherwise ineligible to claim one or more of the main benefits of the policy
  • people who were otherwise highly unlikely to require, or be able to benefit from the policy, such as people who held effective income protection policies

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