Major banks settle CCI class action for $126m

Class action law firm Slater and Gordon has settled its consumer credit insurance (CCI) class actions with CBA, ANZ and Westpac (and their insurers) for $126 million.

The three settlements, which are all subject to court approval, are expected to result in up to a million Commonwealth Bank (CBA), ANZ and Westpac customers being eligible to receive compensation for consumer credit insurance (CCI) they were sold.

The actions were brought against the banks in 2020 after it was alleged that customers may have been ineligible or were unlikely to be able to make a claim because they were already unemployed or had pre-existing health conditions or disabilities when they took out the insurance on credit cards and personal loans.

For example, one plaintiff was reportedly sold Loan Protection by CBA without requesting it and despite being ineligible to claim the main benefits of the policy at the time due to serious health conditions including chronic fatigue syndrome and fibromyalgia. 

The class action lawsuit alleged that the customer was told by a bank employee that if she did not take out the policy, which cost $25 a month, there was no guarantee the loan would be approved. 

The plaintiff said that at no stage was she advised that she was ineligible to make a claim. It was not until she was informed by the bank in late 2020 that she may have been paying for loan protection insurance that did not cover her that she discovered she was ineligible. 

Moreover, some customers suggested they never provided their consent to purchase the policies, were not informed that the insurance was optional, and/or were not informed that they would be charged for it, according to Slater and Gordon.

The settlements come without admission of any wrongdoing and are as follows:

Bank	Insurer/s	Settlement amount
CBA	Colonial Mutual Life Assurance Society Limited	$50 million
ANZ	OnePath Life, OnePath General Insurance, Zurich, QBE	$47 million
Westpac	Westpac Life Insurance, Westpac General Insurance	$29 million
Total		$126 million

Slater and Gordon class actions senior associate, Alex Blennerhassett, said: “Taking on the big banks was never going to be easy but we are pleased that we have been able to resolve these group proceedings and that eligible customers will benefit.

“Class actions are one way people can take on big corporations, including Australia’s big four banks.”

Australia and New Zealand Banking Group Limited (ANZ) has confirmed it has reached an agreement to settle its CCI class action, brought against it by Slater and Gordon in 2020. 

ANZ has agreed to contribute $42 million to the settlement (with $5 million to be covered by QBE), subject to court approval.

“The settlement is without admission of liability and remains subject to court approval,” the bank said.

Similarly, CBA noted the settlement, which also resolves the proceedings for the other defendants, Colonial Mutual Life Assurance Limited (CMLA) and AIA Australia Limited (AIAA), is subject to Court approval.

"This class action relates to consumer credit insurance for credit cards and personal loans that was sold between 1 January 2010 and 7 March 2018," a CBA spokesperson said.

"In agreeing to resolve the litigation, CBA, CMLA and AIAA make no admissions of liability."

The bank added that should the court approve the settlement sum of $50 million, group members will be able to register for the settlement distribution scheme.

"The settlement distribution scheme will determine if individual group members are entitled to recover a share of the settlement sum, after accounting for any deductions which may be approved by the court, such as legal fees charged by the Applicant’s lawyers," the bank said.

A Westpac spokesperson noted that it had agreed to settle the class action relating to the sale of consumer credit insurance products prior to 2019.

“The settlement amount is $29m and remains subject to approval by the Federal Court of Australia,” the spokesperson said.

“Westpac has not sold consumer credit insurance products since 2019.”

During the banking royal commission, Slater and Gordon also initiated a class action against NAB and MLC over its CCI policies on behalf of 50,000 customers. A $49.5 million settlement was reached in November 2019.

A ban on unsolicited “cold call” telephone sales of CCI and direct life insurance took effect from 13 January 2020, after the financial services regulator raised concerns about CCI selling and products.

[Related: NAB agrees to pay $49.5m in CCI settlement]