‘Getting away with blue murder’: Westpac clients fear life insurance class action may not go ahead

Deborah Carter was ripped off by Westpac to the tune of $1K a month. Now it looks like the bank may get away with “blue murder”.

Westpac clients who were ripped off with excessive life insurance premiums fear they may never get their money back after a shock High Court ruling threw a spanner in the works of their legal case.

The class action, which dates all the way back to 2017 in the quaint pre-Royal Commission days, alleges that Westpac charged its own customers more for identical policies they could have purchased more cheaply from independent financial advisers.

It also alleged that Westpac financial advisers, including those at subsidiaries St George Bank, Bank of Melbourne, BankSA and BT Advice, did not offer the best policies from other insurers to customers, instead pushing Westpac Life products.

Shine Lawyers, which is running the case, estimates there are some 88,000 affected customers dating back to February 2011, with a potential $100 million in refunds owed.

“I feel that I was cheated and duped, basically so Westpac could have a quick cash-grab,” said lead plaintiff Greg Lenthall.

Mr Lenthall, 60, was on a low income working as a cook in 2012 when he was signed up for a life insurance policy by an adviser at his local Westpac branch.

He says he believed the adviser would give him a “good deal” and that he put “a lot of faith in the local bank branch to give the best policy and best advice”.

Gregory and Sharmila Lenthall in 2017. Picture: Lyndon Mechielsen/The Australian

The premiums ultimately worked out to nearly one third of his monthly income. “It was approximately $400 a month,” he said. “I was on about $720 a fortnight at the time.”

Working long hours, Mr Lenthall didn’t “scrutinise everything fortnightly or monthly” and wound up with a “shock at the end of the year when you realise you’ve been charged thousands of dollars in fees”.

“I think it possibly would have been considerably less (if I had searched around) for different life insurance brokers,” he said. “I would have got a much better deal.”

Townsville woman Deborah Carter, 53, was paying nearly $1000 a month for two policies — TPD and income protection — until she cancelled when she sold her business in 2015.

Unaware that there were two policy numbers, it “took about a year” for her to realise Westpac was still taking $318 a month out of her account for income protection.

The wildlife rescue worker said she only paid the “hefty premiums” because she had assumed the Westpac financial adviser was “looking after me”. “I didn’t go there looking for the policy, they suggested it,” she said.

“I’d gone to talk about my mortgage. I didn’t shop around because they were my bank, I had all my loans with them. I mean, you’re meant to be able to trust your bank, especially if you’ve got the bulk of your mortgages and payments with them. Aren’t they the people who should be looking out for you?”

Townsville wildlife rescue worker Deborah Carter. Picture: Supplied

In December, the High Court delivered a major blow to the Westpac case — and the broader class actions industry — by overturning a rule that allowed funders of class actions to collect a share from everyone affected.

The High Court ruling on so-called “common fund orders” means law firms have to go back to the old-fashioned way of doing things before 2016, searching out and signing up potential affected clients to take part before commencing the class action.

Common fund orders effectively made it easier for class actions to go ahead, because it gave the litigation funders certainty that they would get their cut from any payment resulting from the claim, even though there is no direct contract between the customer and the funder.

Litigation funder JustKapital is “considering the financial viability of continuing to fund this case as it is concerned that, given the High Court’s decision, it will not be able to recover the substantial costs it has already incurred and earn a return”, Shine Lawyers informed its clients last month.

“Following the decision, we said there’s the possibility the case might not be capable of being progressed unless we can get people to sign up with you,” said Shine Lawyers head of class actions Jan Saddler.

Ms Saddler said she didn’t want to “put a number on it … but the idea is to get as many people as possible”.

“As the lead applicant, Greg is really wanting to rally the other 88,000 people like him,” she said.

Mr Lenthall said he hopes enough Westpac customers will come forward so the class action can go ahead. “That would end up putting some money back in my pocket,” he said.

Ms Carter isn’t looking for a “big payout”, just a reimbursement of the several thousand dollars she mistakenly paid, and which Westpac refused to refund her.

“They’re getting away with blue murder,” she said.

The case returns to court on Wednesday. A Westpac spokeswoman said the bank had “nothing further to add at this time”.

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