“Those people, in our view, ought never to be sold those products because they’d be unlikely to benefit from them.”
About 25,000 people had already signed up to the class action but that number will grow with news of the settlement.
It was sold to me like it was something that I had to take out.
Student Jessica Purcell
The $49.5 million is expected to be distributed to affected customers based on how much money they paid in premiums. Customers forked-out anywhere from hundreds of dollars to more than $1000 a year for the worthless insurance.
In the Federal Court on Wednesday, Justice Michael Lee made it clear he wanted to sort-out the distribution scheme before Christmas, ordering the bank to provide email addresses for eligible customers by December 2.
Mr Paull said it was the largest settlement reached in a class action involving one of the four big banks.
NAB chief legal and commercial counsel Sharon Cook said the bank no longer sells the policies.
“The settlement is the right thing to do for our customers and shareholders,” Ms Cook said.
“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.”
Called Consumer Credit Insurance, policies were sold to customers on the promise it would help them meet repayments on their credit cards and personal loans if they lost their job, got sick or died.
Some NAB customers were ineligible to claim under the policies because benefits were only payable if they died, suffered a critical illness or became disabled or lost their jobs after working more than 15 hours a week.
But students, the unemployed and disability pensioners were sold policies they could not claim the main benefits of.
The lead applicant in the class action, Samantha Clark, hadn’t worked since February 2012 after her husband died and their business folded. She had paid more than $1200 in insurance premiums for two credit cards from 2012 to 2017, according to the statement of claim.
Full-time university student Jessica Purcell said she was pressured to take out insurance despite being a casual employee and ineligible to claim on aspects of the policy.
Corporate watchdog ASIC also found in 2017 that customers of the country’s major banks were unaware they had bought the cover and many were ineligible when they made a claim.
None of the four big banks now sell the types of policies.
Tammy Mills is a Crime Reporter for The Age.