NAB and wealth arm MLC face class action over card insurance

NAB and its wealth management arm, MLC, face a class action on behalf of customers sold ‘worthless’ credit card insurance.

NAB is the first bank to be stung with a class action following the royal commission.

National Australia Bank and its wealth management business MLC face a class action on behalf of customers sold “worthless” ­credit card insurance, as law firms ramp up actions against major ­financial institutions in the wake of the royal commission.

Law firm Slater & Gordon’s class action, filed in the Federal Court, claims MLC and NAB ­engaged in “unconscionable conduct” by selling credit card insurance to holders who were ineligible to claim under its terms.

The alleged victims include students, the unemployed and those on disability pensions, who the bank should have known would have derived little or no benefit from the product, which the law firm has alleged is a breach of the Australian Securities & Investments Commission Act 2001.

Despite earlier this month publicly calling for expressions of interest for aggrieved customers of Commonwealth Bank’s wealth arm, Colonial First State, and those who held their superannuation with battered wealth group AMP, Slater & Gordon chose NAB to file against first.

The nation’s fourth-largest lender is thus the first bank to be stung with a class action following the royal commission.

The financial sector is preparing to be inundated with class action claims following a series of damaging revelations at Kenneth Hayne’s royal commission, which will today release its interim ­report.

AMP was served with five separate class actions after it admitted charging customers fees where no service was given. The separate cases are expected to be wrapped into a single lawsuit.

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Rival law firm Maurice Blackburn is also setting itself up for a string of lawsuits against the banks, having flagged investigations into interest-only lending, mortgage fraud and irresponsible lending based on problematic household income benchmarks.

Slater & Gordon this month launched a campaign targeting super funds it said had “gouged” the retirement savings of many Australians, targeting AMP and CBA over poor returns and high fees in cases it argued could reap up to $500 million in damages.

Class actions principal lawyer Andrew Paull said NAB had “admitted as much” to selling insurance it knew was of little value to customers.

“Despite knowing this, NAB have continued to push the insurance widely, reaping millions in premiums while doing so,” Mr Paull said.

NAB chief legal and commercial counsel Sharon Cook yesterday said the bank was yet to receive the claim. “We encourage NAB customers who have questions regarding our products and services to talk to their banker or contact us,” Ms Cook said.

“NAB is committed more than ever to making sure customers come first, always. We have made changes, and will continue to make changes to transform our business — to serve customers better and to build trust.”

It’s a further setback for the MLC business, which NAB has planned to demerge or float as it simplifies its corporate structure.

CBA was recently forced to flag about $10m in refunds for the sale of dodgy insurance to nearly 70,000 customers.

The corporate watchdog has already launched proceedings against NAB in the Federal Court over the group’s super fee-for-no-service scandal.

A Federal Court lawsuit alleges NAB’s super trustees, NULIS Nominees and MLC Nominees, misled customers and deducted $33m in fees from 220,000 savers without providing any services.

A further $67m was taken from another 300,000 super savers where members didn’t receive any services, ASIC claims.

Yesterday Westpac flagged a surprise $235m writedown in part to cover fee refunds for advice that was never provided by the group’s salaried financial planners.