CBA, ANZ and Westpac settle class actions for $126m with Slater & Gordon

Up to one million borrowers will now be eligible to receive compensation after the trio settled without admitting liability.

Three of the nation’s biggest banks – Commonwealth Bank, ANZ and Westpac – will pay $126m to settle class actions alleging they missold consumer credit insurance to customers.

Up to one million borrowers will be eligible to receive compensation for credit insurance they were sold after the three banks settled without admitting liability.

Slater & Gordon had brought the claims in 2020 – after the financial services royal commission – alleging the banks sold useless protection to clients taking out credit cards and personal loans.

This included sales to vulnerable customers who were unlikely or ineligible to make a claim, such as those who were already unemployed or had pre-existing health conditions, may have never provided their consent to take out insurance, or been informed that the insurance was optional or that they would be charged for it.

Kristy Fordham, the lead plaintiff in the CBA proceedings, said she was sold loan protection without requesting it while she was a single mother of four children, not working and had been diagnosed with serious health conditions including chronic fatigue syndrome and fibromyalgia.

Before discovering she was ineligible to make a claim, a CBA employee had said that if she didn’t take out the policy, at a cost of $25 a month, there was no guarantee her loan would be approved.

It was not until late 2020 that she was informed by the bank that she may have been paying for insurance that did not cover her and that she was ineligible.

Ms Fordham said she believed the bank knew that she couldn’t benefit from their products, but deliberately sold them to her anyway. “We were all so vulnerable or else we wouldn’t have needed loans from them in the first place, yet they took advantage of that, in my opinion. It was behaviour that they made a lot of money from, so it’s about time those of us affected get compensated,” she said.

CBA paid $50m to settle the case against it and insurer Colonial Mutual, while ANZ and insurers One Path Life, OnePath, Zurich and QBE settled for $47m. Westpac settled for $29m.

The three settlements are all subject to court approval.

NAB and its subsidiary MLC had in 2019 settled a similar lawsuit for $49.5m, also brought by Slater & Gordon.

“Taking on the big banks was never going to be easy but we are pleased that we have been able to resolve these group proceedings and that eligible customers will benefit,” said Slater & Gordon’s Alex Blennerhassett

The firm ran its consumer credit insurance class actions on a no win, no fee basis.

Originally published as CBA, ANZ and Westpac settle class actions for $126m with Slater & Gordon