Westpac pays $30m to cover class action on insurance premiums

Westpac settles class action, paying up to $30m to cover overcharged premiums sold by advisers between 2011 and 2017.

Westpac has settled a class action over insurance premiums. Picture: Christian Gilles

Westpac had paid $30m to settle a class action on insurance premiums paid on policies taken out through its life insurance business between 2011 and 2017.

The settlement, which is capped at $30m, remains subject to approval by the Federal Court of Australia and is resolved without any admission of liability.

The bank had been targeted by Shine Lawyers, which launched proceedings against Westpac in October 2017.

Shine had alleged customers had not been informed by Westpac-owned financial advisers that they could obtain substantially similar or better policies for lower premiums.

Lawyers for Shine had alleged customers were overcharged, on average, as much as 4.5 per cent to 9.09 per cent in premiums for their policies.

The class action alleged the issue had affected as many as 80,000 Australians.

Shine said the issue had affected customers of Westpac, BT, St George, Bank of SA, and Bank of Melbourne who were advised to take out life insurance.

Shine lawyers head of class actions Jan Saddler said the settlement was a “great outcome”.

‘“We encourage all those customers of Westpac, St George, Bank of Melbourne and BT who

obtained life insurance in the period between 2011 and 2017 to register with Shine Lawyers to ensure they are included in the settlement,” she said.

“We’re pleased with the outcome of our negotiations.”

The settlement comes on top of the $282m hit Westpac will take to its half year profit, largely due to extra provisions set aside to cover customer refunds and litigation costs.

The bank announced on Monday costs amounting to $588m to cover provisions, writedowns and losses, but will offset the losses with a $288m net gain on the back of investments in cryptocurrency exchange Coinbase.

Compliance and risk expenditure has surged 17 per cent for the year at the bank, driven by remediation programs from the bank on the back of anti-money laundering failures at the bank.

Westpac is also in the firing line after being slapped with court action by Slater and Gordon after allegedly selling thousands of customers insurance on credit cards and personal loans “that was of little to no value”.

Slater and Gordon alleges more than 368,000 Australians are eligible for the current class action against the bank, which was launched in November last year.