The major lender has agreed to pay thousands of customers who were sold junk credit card and personal loan insurance. National Australia Bank has agreed to pay $49.5 million in compensation to more than 300,00 customers who were sold junk credit card and personal loan insurance.
The major lender and its subsidiary MLC Limited have agreed to settle a class action taken against them in the Federal Court, according to law firm Slater and Gordon.
The proceedings were brought against NAB and MLC in September last year and relates to the sale of consumer credit insurance (CCI), personal loan cover and credit card cover.
Slater and Gordon practice group leader Andrew Paull said it is the first consumer class action settled related to the royal commission into the finance sector.
“A $49.5 million settlement is a terrific result for the tens of thousands of people who fall within the class,” he said in a statement.
“If any NAB customers think that they have been paying for either NAB credit card cover or NAB personal loan cover, we’d encourage them to register their details on our website.”
The major lender’s legal counsel Sharon Cook said the settlement was “the right thing to do.”
“As we have said, we can only move forward if we deal with the past, so that we can earn trust among customers and the broader community and grow confidence in the future of NAB.
“It is important to note NAB no longer sells CCI products through any of its banking channels, and has implemented a remediation program for CCI customers.”
NAB has removed all consumer credit insurance with the corporate regulator slamming the home loan variety of the financial product which “has consistently failed consumers”.
An Australian Securities and Investments Commission report released in July concluded consumer credit insurance, which is often added on when a person takes out a loan or gets a credit card, represented “extremely poor value for money” and was regularly miss-sold.
ASIC said the way in which people were sold the insurance caused harm as “telephone sales staff used high-pressure selling and other unfair sales practices” and customers were advised to buy unsuitable policies.
Advocacy group Consumer Action welcomed ASIC’s report, saying it “confirms that consumer credit insurance … is junk”.
“Put simply, add-on insurance is a very lucrative business for banks and other lenders but results in more harm than good for their customers,” Consumer Action CEO Gerard Brody said at the time.
ASIC said that for every dollar paid in premiums on credit card insurance, customers on average received only 11 cents in claims.
“We are deeply troubled by the findings in our report, and the stories they tell of unfair practices occurring within Australia’s largest and most well-known financial institutions,” ASIC Commissioner Sean Hughes said.
“Lenders and insurers have had more than enough time to improve sales practices and provide better value for consumers.”
NAB customers with questions about their CCI policies are urged to call 1300 168 909.This article was first published by https://www.news.com.au
Author: James Hall