Court date set in insurance case against Aussie

The class action is limited to approximately 13,000 customers, with the case partly funded by global litigation financier Woodsford, which specialises in ESG‑linked and consumer claims.*

Shine said many customers already held life or income protection insurance or could have obtained comparable or superior cover more cheaply and that the Aussie‑branded policies had strict limitations around when benefits were actually payable.

However, the actual issues before the Court are questions of appropriate representations and general or personal advice.

The first and second defendants are defending the proceedings and deny liability, and have said that the policies are not junk or valueless.

Instead, they have flagged they life insurance policies underwritten by APRA regulated life insurers and respond according to their terms, including claims paid of over $214m to policyholders, according to the defence*.

Speaking on behalf of Shine, Shine Lawyers’ class actions practice leader Kione Johnson, who is running the case, said the proceeding aimed to recoup premiums paid on products that are alleged to be practically worthless.

She said: “The policy promised mortgage-holders assistance for home loan repayments in the event of illness or injury, loss of employment or death."

“We allege it was an unnecessary expense given most customers may have already held life-insurance policies that offered them this security and coverage, and/or because Aussie’s policy only provided cover in a limited range of circumstances.”

Alleged breaches span advice, conflicts, and conduct laws

The statement of claim alleges that mortgage protection recommendations made by Aussie brokers amounted to “personal financial product advice” under the Corporations Act because they followed detailed fact‑finding about each customer’s income, expenses, debts, objectives, and risk profile.

On that basis, Shine said ALI, as the Australian financial services licence holder, was required to ensure advice was given efficiently, honestly, and fairly; manage conflicts; properly train brokers; and take reasonable steps so they met best‑interests, appropriateness, and warning obligations.

As credit representatives of Aussie Home Loans (AHLI/Lendi), Shine said brokers were required to make and verify reasonable inquiries about the consumers’ financial situation and requirements and, from February 2020, to act in the customers’ best interests and give priority to the customer where conflicts arose.

Shine accepted that brokers generally completed thorough inquiries for the mortgage itself – including whether insurance premiums would be added to the loan – and used that to say Aussie and ALI knew brokers held detailed information about each borrower’s circumstances.

The firm alleges brokers did not properly investigate alternative insurance options or a customer’s existing cover and that it should have been “reasonably apparent” their information about clients’ protection needs was incomplete, triggering a duty to warn them that recommendations were being made on a partial picture.

The pleading also targets the structure of Aussie’s “MPP Sales System”.

Shine claims that by following a standardised process, brokers and Aussie effectively represented that:

• The broker was putting the customers’ interests ahead of their own and the firm’s.
• All reasonable and necessary inquiries about circumstances and competing products had been made.
• MPP/MyPP were suitable and the most appropriate mortgage protection options available.

Shine alleges that these impressions amounted to misleading or deceptive conduct and unconscionable behaviour under the ASIC Act, Corporations Act, and Australian Consumer Law.

Aussie denies allegations, trial to test add‑on insurance model

When contacted by The Adviser for comment, Aussie’s parent company, Lendi Group, responded with a brief statement, signalling it would contest the claims.

“We are aware of the Federal Court proceeding concerning Mortgage Protection Plan and My Protection Plan products. The allegations are denied. We respect the legal process and it would not be appropriate to comment further while the matter is before the Court,” a Lendi Group spokesperson said.

ALI Group declined to comment on the matter.

The action comes after an attempt by Lendi Group and ALI Group in June 2025 to have the proceedings declassified, which the Federal Court rejected.

It also follows years of regulatory scrutiny of add‑on insurance and remediation programs across banks and insurers, including the fallout from the Hayne royal commission, which labelled some consumer credit insurance products “junk” because claims were rarely paid relative to premiums.

*This story was updated on 9 July to include the defence's position and remove quotes from Shine Lawyers practice leader Kione Johnson.

[Related: Is mortgage protection ‘junk’ insurance?]