Pensioners, students and unemployed will receive $50 million in compensation from NAB
National Australia Bank (NAB) will pay $49.5 million to tens of thousands of 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 by law firm Slater and Gordon in the Federal Court.
The class action, which is taken on behalf of tens of thousands of Australians, alleged NAB and MLC engaged in unconscionable conduct by selling consumer credit insurance (CCI), credit card insurance and personal loan insurance that did not adequately cover the customers.
Slater and Gordon practice group leader Andrew Paull said the policies were “next to worthless” to many of the people they were sold to.
He said it was the first consumer class action settled in relation to the royal commission into the finance sector, and the compensation was the largest that had ever been paid by a big-four bank to its customers.
“A $49.5 million settlement is a terrific result for the tens of thousands of people who fall within the class,” Paull 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 compensation payments will be limited to pensioners, students and unemployed customers who were sold the insurance policies under scrutiny.
Paull said the amount of payment each customer could receive would depend on their premiums, which ranged from hundreds to over a thousand dollars per year.
“Those amounts are very significant for the types of people who are participating in this action,” he said.
“For a person who is unemployed, for a person living on the disability pension, a few hundred dollars a year or a thousand dollars a year makes a very big difference.”
NAB’s legal counsel Sharon Cook said the settlement was “the right thing to do” to regain customer trust.
“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,” she said.
“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.”