CBA’s $50m consumer credit insurance class action settlement approved
The Federal Court has approved Commonwealth Bank’s $50 million settlement in the consumer credit insurance class action.
Justice Michael O’Bryan accepted the settlement reached by CBA, the Colonial Mutual Life Assurance Society and AIA Australia last November, bringing an end to Slater and Gordon’s consumer credit insurance class action against three of Australia’s big banks.
On Friday (15 September), Justice O’Bryan said he was “not satisfied” with Slater’s fee estimates in a past hearing but has since accepted affidavit material from an employed solicitor.
“Having received that additional material and considered that additional material, I am satisfied the settlement should be approved and distribution of the settlement funds as proposed by the applicant should also be approved,” Justice O’Bryan said.
“Can I commend all parties on achieving a successful resolution of the proceedings and settlement of the proceedings.”
Justice O’Bryan signed off on ANZ’s $47 million settlement earlier this month and Westpac’s $29 million settlement in June.
Slaters brought the class actions against the three major banks on behalf of up to one million customers who were allegedly sold the insurance despite not consenting or not being able to make a claim.
In CBA’s case, Slater’s alleged 700,000 group members had been sold the allegedly worthless CreditCard Plus policy and Loan Protection policy – both distributed by Colonial Mutual Life Assurance Society – between 1 January 2010 and 7 March 2018.
Group members alleged they had acquired at least one of the insurance policies and suffered loss or damage as a result.
The firm alleged some customers were illegible to make a claim due to being unemployed or having pre-existing health conditions or disabilities when they took out the insurance.
While some group members did not give their consent to purchase the insurance, others were allegedly not informed it was optional and some customers were not informed they would be charged for it.
At the time the settlement was agreed, without admission of any wrongdoing, senior associate Alex Blennerhassett said the firm was pleased that eligible customers would benefit.
“Class actions are one way people can take on big corporations, including Australia’s Big Four banks,” Blennerhassett said.
Lead plaintiff in the CBA class action, Kristy Fordham, said she was sold Loan Protection without requesting it and her pre-existing health conditions meant she was ineligible to claim the main benefits.
Fordham said she was glad the legal fight was now over.
“I believe the bank knew full well that we couldn’t benefit from their products, but they deliberately sold them to us anyway,” she said.
“We were all so vulnerable or else we wouldn’t have needed loans from them in the first place, yet they took advantage of that, in my opinion. It was such behaviour that they made a lot of money from, so it’s about time those of us affected get compensated.”
This story first appeared in Money Management's sister publication Lawyers Weekly.