A class action has been filed against Commonwealth Bank in relation to allegations that the major bank sold its customers “junk” credit card and personal loan insurance.
Slater and Gordon has filed a class action in the Federal Court against Commonwealth Bank of Australia (CBA) and its insurer, Colonial Mutual Life Assurance Society Ltd.
The class action alleges that the bank engaged in unconscionable conduct, misleading or deceptive conduct, and failed to act in the best interests of customers, providing inappropriate advice to them by selling them CCI for credit cards and personal loans, which were “unsuitable”.
It focuses on customers who were sold CBA CreditCard Plus cover for their CBA credit card or CBA Loan Protection for their personal loan at any time since 1 January 2010.
The bank has already refunded approximately $10 million for selling the add-on insurance to customers who were “unlikely to meet the employment criteria and would be unable to claim the insurance”.
This came after an investigation by the financial services regulator found that, between 2011 and 2015, many customers were sold the insurance despite being unemployed or students, and therefore ineligible to claim for unemployment or temporary and permanent disability cover.
However, Slater and Gordon said they believe the remediation program “did not adequately compensate customers” and has therefore filed the class action to “ensure that all CBA CCI customers who suffered loss as a result of the bank’s wrongdoing are compensated”.
It alleges that “many customers are continuing to be charged thousands of dollars in fees for the worthless products to this day”.
Slater and Gordon practice group leader Andrew Paull commented: “A 2018 review of the Commonwealth Bank’s sale of consumer credit insurance products revealed that more than 200,000 people who were unemployed or not working full time had been sold this type of policy, meaning it was very unlikely they would have been able to claim against the insurance.
“This is reprehensible behaviour by the bank, which has chosen to compensate only a negligible portion of its customers, despite their admission that they knew the insurance was worthless.
“This move to return only a small portion of its customers’ premiums seems to have been a tokenistic effort to protect the bank’s brand rather than a genuine attempt to make good its past wrongdoing,” Mr Paull said.
In a statement, the major bank acknowledged that class action proceedings had been filed by Slater and Gordon in the Federal Court of Australia against CBA and Colonial Mutual Life Assurance Society Ltd, adding: “CBA is reviewing the claim and will provide any update as required.”
The CBA class action is part of a series of cases following the banking royal commission, which heard that banks were using pressure tactics to sell unnecessary CCI products to customers who were ineligible to claim under the policies.
The Australian Securities and Investments Commission recently revealed that over $160 million in remediation is due to be paid out to customers who have been sold “junk” consumer credit insurance (CCI) from 11 different banks and lenders.
Many lenders have now ceased to offer CCI products with credit cards, personal loans or home loans, while cold-calling for CCI has also been banned.
The class action, filed in the Federal Court, is Slater and Gordon’s fourth in the #GetYourInsuranceBack campaign.
[Related: CBA to refund $10m for mis-selling CCI]