Massive payout to up to one million ANZ, Commonwealth, Westpac customers in $126m settlement

Up to one million Australians could be eligible for compensation as three of the country’s big banks and their insurers agreed to pay more than $126 million in a massive class action win.

Law firm Slater and Gordon this week reached settlements with Commonwealth Bank (CBA), ANZ and Westpac - which are subject to court approval - to compensate customers for consumer credit insurance they were sold while taking out credit cards and personal loans.

WATCH THE VIDEO ABOVE: Australia’s main banks are passing on the full rate hike to customers.

Many customers who were sold the insurance were unlikely to or may have been ineligible to make a claim due to unemployment or pre-existing health conditions or disabilities when they took out the policy.

Slater and Gordon said some customers never consented to buying the policies and others were never told they would be charged for it.

The settlements, which were without any admission of wrongdoing, mean affected CBA customers will receive a share in $50 million from the bank and its insurer Colonial Mutual Life Assurance Society Limited.

ANZ and insurers OnePath Life, OnePath General Insurance, Zurich and QBE agreed to pay out $47 million, while Westpac and insurers Westpac Life Insurance and Westpac General Insurance reached a $29 million settlement.

Lead plaintiff in the CBA proceedings, Queensland woman Kristy Fordham, says she was sold the loan protection without being asked.

At the time, the single mother-of-four was not working and had been diagnosed with serious health conditions including chronic fatigue syndrome and fibromyalgia.

This made her ineligible to claim the main benefits of the policy, but she says she had no idea she was not covered by the policy.

She says she was told by a bank employee there was no guarantee her loan would be approved unless she took out a $25-a-month insurance policy.

“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,” Fordham said.

“It was behaviour that they made a lot of money from, so it’s about time those of us affected get compensated.”

Slater and Gordon senior associate Alex Blennerhassett said the win was one way people could take on big corporations.

“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,” Blennerhassett said.

Banks respond

ANZ said it had reached an agreement to settle the class action brought against it in 2020.

“The class action is against a number of parties, including ANZ, and relates to the sale of three consumer credit insurance products,” ANZ said.

“ANZ will contribute $42 million to the settlement, which is covered by provision held at September 30, 2022. The settlement is without admission of liability and remains subject to court approval.”

Westpac said the class action related to the sale of policies prior to 2019.

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

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

A CBA spokesperson said if the court approves the $50 million settlement, 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 said.

CBA said the class action relates to consumer credit insurance for credit cards and personal loans sold between January 1, 2010 and March 7, 2018.

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