The law firm alleged ANZ and Westpac have sold “junk insurance” products to potentially hundreds of thousands of unsuspecting, vulnerable customers.
The actions have come days after Slater and Gordon settled a similar case with NAB, with $49.5 million compensation to be paid out to customers.
ASIC has found that ANZ, Westpac and other banks and insurers across Australia have collected more than $1.78 billion in premiums on consumer credit insurance (CCI) products over the last eight years, while returning only 11 per cent of that amount back to consumers in claims made on the policies.
Slater and Gordon noted since 2011, ANZ’s credit card cover has on average returned less than seven cents in the dollar to consumers, while Westpac’s credit card insurance returned less than 12 cents in the dollar.
In contrast, car insurance is said to on average pay 89 cents in claims for dollar in premiums collected.
ASIC called CCI products “extremely poor value for money” in a report earlier this year, adding their sale practices cause consumers harm.
ANZ and Westpac have stopped selling the products to new customers, but they are yet to compensate past and current customers.
ANZ said in a statement that it had been alerted Slater and Gordon intended to launch the class action in relation to three of its products, but the bank added it had not been served with any statement of claim and is not aware of the basis of the proposed action.
Likewise, Westpac said it had not been served with a statement of claim.
Slater and Gordon commented it has already been contacted by hundreds of customers from both of the major banks who are interested in participating in the claim.
Slater and Gordon practice group leader Andrew Paull stated: “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.
“Others were simply led to believe the insurance they bought was free, or mandatory. Neither was the case.”
The CCI concerns have followed on from the royal commission, 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.
Last year, CBA implemented a refund program for CCI products, shortly after chief executive Matt Comyn gave evidence to the commission that he had in 2015 suggested the bank stop selling the products.
“The behaviour uncovered by the royal commission, whereby big multimillion-dollar financial institutions were taking advantage of vulnerable Australians for financial gain was reprehensible,” Mr Paull said.
“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.”
