Posted on 22 Nov 2019
Slater and Gordon launches two new class actions against ANZ and Westpac over junk insurance
Slater and Gordon has today announced two new class actions against ANZ and Westpac for selling junk insurance products to potentially hundreds of thousands of unsuspecting, vulnerable customers.
This comes only days after the firm settled a similar case with NAB for $49.5 million, providing compensation to those who bought the worthless insurance.
As with NAB, both the ANZ and Westpac class actions will be run no win, no fee and without a litigation funder.
The consumer credit insurance class actions are part of a series of cases following from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry which heard that banks were using pressure sales tactics to sell unnecessary credit card and personal loan insurance to vulnerable customers ineligible to make claims under the policies.
Slater and Gordon Practice Group Leader Andrew Paull said: “Banks have been abusing their power by selling junk insurance products, adding thousands to their customers’ credit card bills or personal loan repayments while providing little or no benefits to the customer.”
“Customers who trusted the big banks were ripped off and continue to be out of pocket after being pressured to sign up to worthless insurance cover,” Mr Paull said.
“Many people who purchased these insurance products had disabilities, were unemployed, or were critically ill, and therefore not eligible to claim against the insurance products.
“Others were simply led to believe the insurance they bought was free, or mandatory. Neither was the case.
“The behavior uncovered by the Royal Commission, whereby big multi-million dollar financial institutions were taking advantage of vulnerable Australians for financial gain was reprehensible.
“We will continue to hold the big banks to account on behalf of the hundreds of thousands of Australians who have been ripped off. They deserve to get their money back.”
ASIC has found that ANZ, Westpac and other banks and insurers across Australia have collected over $1.78 billion in premiums on consumer credit insurance products over the last eight years, while returning only 11 per cent of that amount back to consumers in claims made on the policies.
ASIC’s 622 Report found that ANZ and Westpac were selling consumer credit insurance products which, in some cases, returned even less to customers than the products offered by NAB, which settled Slater and Gordon’s claim against it on Wednesday.
Since 2011, ANZ’s credit card cover has on average returned less than 7c in the dollar to consumers, while Westpac’s credit card insurance returned less than 12c in the dollar.
This compares to products such as car insurance, which on average pay 89c in claims for every dollar in premiums collected. Those figures demonstrate why consumer credit insurance has been unusually profitable for banks and insurers, but extremely poor value for their customers.
In 2018, the Commonwealth Bank implemented a refund program in relation to its products. This announcement came shortly before Commonwealth Bank chief executive Matt Comyn gave evidence at the Royal Commission that he had in 2015 suggested the bank stop selling these dud insurance products.
ANZ and Westpac are yet to announce any steps to compensate customers in relation to their junk insurance products. Although they, like all of the ‘big 4’ banks, have stopped selling them to new customers.
Slater and Gordon has already been contacted by hundreds of Westpac and ANZ customers who are interested in participating in the claim.
The products were known as:
- ANZ Credit Cover
- ANZ Credit Cover Plus
- ANZ Loan Protection
- Westpac Credit Card Repayment Protection
- Westpac Personal Loan Protection
Slater and Gordon will file the ANZ and Westpac class actions imminently.
• ANZ, Westpac and other banks and insurers across Australia have collected over $1.78 billion in premiums on consumer credit insurance products over the last eight years
• Since 2011, ANZ’s credit card cover has on average returned less than 7c in the dollar to consumers.
• Westpac’s credit card insurance returned less than 12c in the dollar.
Media Contact Therese Allaoui (03) 9602 6844 / 0428 994 937