Feb 28 (Reuters) - A class action lawsuit has been filed against Westpac Banking Corp and Australia and New Zealand Banking Group on Friday over the sale of “junk insurance” to consumers.
The class action filed by law firm Slater and Gordon relates to consumer credit insurance and alleges that Australia’s second and fourth largest banks misled consumers when adding these products to credit cards and personal loans.
Consumer credit insurance protects a consumer’s capacity to meet payments on loans and other credit in the event something were to affect their ability to do so.
Westpac will defend itself against the claims made in the class action, it said in a statement on Friday.
ANZ did not immediately respond outside regular business hours.
“Many people who were sold the insurance had disabilities, were unemployed, or were critically ill, and therefore not eligible to claim on the policies,” Andrew Paull, Slater and Gordon’s practice group leader said in a statement.
“Others were led to believe the insurance they bought was free, or mandatory. Neither was the case,” he added.
Westpac added that it does not sell these type of insurance products anymore.
National Australia Bank, the country’s third largest lender, reached a A$49.5 million ($32.65 million) settlement last November for a similar lawsuit over the sale of worthless insurance policies to customers for their credit cards.
$1 = 1.5161 Australian dollars Reporting by Nikhil Kurian Nainan in Bengaluru; editing by Jason Neely