The Federal Court has approved a settlement reached in relation to a class action brought against Commonwealth Bank alleging mis-selling of consumer credit insurance.
The bank announced yesterday that the court approved a settlement of A$50 million. The big banks have paid out more than $175 million over the past four years to settle CCI claims.
The claim against the bank, which was filed in June 2020, alleged that it sold consumer credit insurance policies with credit cards and personal loans knowing they were worthless. The claim related to CCI cover sold between January 2010 and March 2018.
According to the statement of claim, CBA admitted to the Hayne royal commission that the policies were “junk insurance” but, despite this, existing policies “have been rolled over and many customers are continuing to be charged thousands of dollars in fees for worthless products to this day”.
Lawyers representing the claimants, Slater and Gordon, said in a statement at the time: “A review of the 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.”
Among the other big banks, in 2019 NAB and MLC agreed to pay $49.5 million to settle a class action claim over CCI, Last year ANZ agreed to pay $47 million and Westpac $29 million to settle similar claims.
In 2021, CBA pleaded guilty to 30 criminal charges of making false or misleading representations to 165 customers when selling CCI.
The false or misleading representations, which were made between 2011 and 2015, were that customers could claim against the policies “when some or all of these claims were not available to them”.