Slater and Gordon alleged that the bank sold "junk" credit card and personal loan insurance to its customers between 1 January 2010 and 7 March 2018
CBA hit with class action filed by Slater and Gordon. (Credit: Commonwealth Bank of Australia)
Slater and Gordon has filed a class action in the Federal Court of Australia against the Commonwealth Bank of Australia (CBA) for selling “junk” insurance to its customers.
The Australian law firm alleged that the bank sold “junk” credit card and personal loan insurance to its customers between 1 January 2010 and 7 March 2018. It further said that the bank itself admitted that the products were not worth, although they were sold to hundreds of thousands of their customers.
CBA said that it is reviewing the claim of Slater and Gordon and will give any update as needed.
The class action proceedings have also been filed against The Colonial Mutual Life Assurance Society Limited (CMLA), the key life insurance entity of CommInsure Life. CBA had signed a deal last year to sell CommInsure Life, which is its Australian life insurance business, to AIA Australia.
According to Slater and Gordon, it was revealed during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, that CBA’s present CEO Matt Comyn had tried to get the bank to stop selling the junk insurance in 2015.
However, Comyn was told by the then CEO to “temper [his] sense of justice”, and the insurance products continued to be sold until March 2018, said the law firm.
Existing policies, though, have been rolled over simply and several customers are continuing to be charged thousands of dollars in fees for the products till date, alleged Slater and Gordon.
Slater and Gordon practice group leader Andrew Paull said: “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.”
Recently Slater and Gordon settled a similar class action against NAB
Last month, the Australian federal court approved the AUD49.5m ($34.13m) settlement between Slater and Gordon and the National Australia Bank (NAB) pertaining to the law firm’s class action over the sale of credit card and personal loan consumer credit insurance products by the bank.