NAB and MLC now face a class action over junk credit card insurance

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  • Law firm Slater and Gordon launched a consumer credit insurance class action against NAB and MLC.
  • The action alleges unconscionable conduct by selling insurance to card holders who were ineligible to claim under the terms of the policy.
  • Credit card insurance was sold to casual, contract and self-employed workers, and students and disability pensioners, all of them who couldn’t make a claim under the terms of the policy.

Class action proceedings against the National Australia Bank and and insurance giant MLC on behalf of customers sold worthless credit card insurance have been filed in the Federal Court.

Evidence has been given in the financial services royal commission about credit card insurance sold to casual, contract and self-employed workers, and students and disability pensioners, all of them ineligible to claim against the policy.

Those with existing life or income protection insurance were also encouraged to take out insurance on their credit card despite already being covered by their existing policies.

The class action alleges bank and insurance giant in unconscionable conduct, in contravention of the Australian Securities and Investment Commission Act, by selling insurance to card holders who were ineligible to claim under the terms of the policy.

“All of the claimants had a NAB credit card and were then offered NAB credit card insurance,” says Andrew Paull, Class Actions Principal Lawyer at Slater and Gordon.

“However it was highly unlikely that they would benefit from this policy.

“Most were existing NAB customers and the bank should have known the insurance was likely to be of little or no benefit to them. Despite knowing this, NAB have continued to push the insurance widely, reaping millions in premiums while doing so.”

Most people were sold the insurance over the phone and were not given a reasonable opportunity to understand the terms and conditions of the policy.

“In the case of the life cover, the policy was of minimal value to many customers,” says Paull.

“NAB admitted as much in the Royal Commission.

“Both NAB and MLC were in much stronger bargaining positions than any of the people they were contacting and selling this insurance to.

“They have taken advantage of hundreds, potentially thousands of their loyal customers.”

Slater and Gordon gives the example of Jessica Purcell, a full time university student when she was sold consumer credit insurance, despite being a casual employee at the time and ineligible to claim against certain parts of the policy.

“It was sold to me like it was something that I had to take out,” she says.

“I honestly wouldn’t have thought twice about it if I hadn’t heard about the class action. I would have just kept paying it.”

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