SYDNEY (Reuters) - An Australian law firm filed a class-action lawsuit against National Australia Bank (NAB.AX) and its pension unit on Thursday on behalf of customers who were allegedly sold worthless insurance policies for their credit cards.
The class action is the sixth to be filed against a major financial institution and the first against one of its powerful banks as a result of revelations stemming from a public inquiry into Australia’s financial sector.
The inquiry, called a Royal Commission, can recommend regulatory reform and prosecutions and is due to table an interim report in coming days before issuing its final recommendations to the government in February 2019.
Slater and Gordon lawyer Andrew Paull said NAB and its pension unit MLC, one of Australia’s largest pension funds, had knowingly sold insurance to credit-card holders who were ineligible to claim under the terms of the policies.
“Most were existing NAB customers and the bank should have known the insurance was likely to be of little or no benefit to them,” Paull said in an emailed statement.
“Despite knowing this, NAB have continued to push the insurance widely, reaping millions in premiums while doing so.”
NAB Chief Legal and Commercial Counsel Sharon Cook said the bank would “consider carefully any allegations”.
The law firm alleges most of the policies were sold over the phone and people were not given a reasonable opportunity to understand that they probably would not qualify for any benefit.
The lawyers did not specify the size of the damages it would pursue, beyond saying “millions” should be paid back.
The Royal Commission has revealed Australia’s top banks routinely breached laws when issuing home loans, credit cards and other consumer loans.
Revelations flowing out of the inquiry have triggered five shareholder class actions against the country’s largest listed wealth manager, AMP Ltd (AMP.AX), for allegedly failing to disclose governance problems.
Reporting by Paulina Duran; Editing by Stephen Coates