In a statement, Westpac said it had agreed to settle the action relating to “premiums paid for certain insurance policies taken out with Westpac Life Insurance Services Limited between 2011 and 2017”.
The bank said the settlement was capped at $30 million and remained subject to approval by the Federal Court.
The class action, previously reported on by ifa in August last year, was filed by Shine in 2017 and relates to customers who were sold life insurance by Westpac, BankSA, St.George Bank, Bank of Melbourne and BT Advice.
At the time, Shine national class actions leader Jan Saddler said more than 100,000 Westpac customers could be affected by the alleged misconduct thay saw clients overcharged between 4.5 per cent and 10 per cent in annual premiums, after the bank’s aligned advisers allegedly “funnelled” customers into the bank’s expensive branded life insurance products.
“We allege Westpac quietly and systematically pilfered excessive fees from their own customers to make millions in profits at the expense of those customers,” Ms Saddler said.
The law firm had stated that advice customers involved in the class could get between $1000 and $10,000 compensation each.
In a statement responding to the settlement, Shine said “tens of thousands” of life insurance customers had been involved in the action.
Ms Saddler said the firm was “pleased with the outcome of our negotiations”, although Westpac had not admitted liability as a result of the settlement.
Some horrific stories from Westpac still haven’t surfaced. Westpac customer Couple had life cover sold them. Accident only. It’s pricing for both was actually higher than Onepath n some others but was death by any means. It was sold to a chronic alcoholic and no real undertaking to know the client. He died in a car crash. Always likely to have alcohol in his blood but this time it was high level. Of course it’s a exclusion in accidental death. Solicitors tried their heavy approach which I could see would not work. My point was to challenge the advisor and their PI for not doing the basics which in the ordinary course of business could have exposed that accidental death cover couldn’t be a option and that it’s priced far too high for what a potential claims ratios are for that business. It certainly should be cheaper than death by any means. Sadly friends of widow worked in the solicitors office n pushed her away from my investigation and I lost authority to speak to Westpac claims. Ah well, she was conned by over exuberant legal thief’s. They often know little of their subject and apply fees not relevant to their knowledge or experience on these matters.
But wait, theres more! The first & second generation of Westpac life trauma policies had an exclusion prohibiting the payment of a trauma benefit involving ” ANY MATERIAL BREACH OF LAW” So you were sober, driving home at night, dozed off, crossed double yellow lines, hit tree. Quadreplegia !!! Sorry, no trauma payout. The cops, after interviewing you in hospital would have charged you with NEG DRIVING – a breach of law.
I complained in person to a former(now) ACCC commissioner. They would only act on a CONSUMER complaint, not from an adviser
$30 million divided by 100,000 customers is on average $300 but Ms Shine says they will get Minimum $1000? How? Wonder how much of the $30mill will get to the policy holders v Ms Shines Family Trust. “clients overcharged between 4.5 per cent and 10 per cent in annual premiums” compared to what? Were the premiums inflated against say the Westpac direct retail product? against the cheapest in market at the time? If the latter every adviser is at risk – only the cheapest product should be recommended? I have overpaid for a return flight to Sydney – can I sue Flight Centre?
My understanding from a very good source, is that 50% & 75% loadings were waived for this sub-product, thereby covering more applicants than might otherwise have been the case. Not that better outcomes is the remit of SHine et al.
I guess 90% of the settlement sum will be paid to Shine Lawyers ???
So does my ASIC levy go up again next year thanks to this? Leaving my opinion of the litigation industry aside, will the managers of these sales sweat shops be made to pay back their bonuses, or is it once again on the back of lone adviser. Remember these sales people were salaried and had kpi targets, the client was secondary to employer loyalty. The biggest crime in Australian corporate history was letting the banks into insurance and investment. And we are paying for this.
I was asked by my sister in law to look at I/P & Life/Trauma policies she’d taken out after being gently ‘pushed’ that way by the ANZ after refinancing. I replied that I wouldn’t touch it, as it was only in place 3 months, & was with Onepath, whom I use a lot & trust. However after much begging by her, I decided to take a look. The ANZ Bank guy hadn’t compared anything else with the Onepath product, in fact the only comparison he made in the SOA was against having nothing! Ultimately I was able to easily put an (to age 65) I/P in place elsewhere that was cheaper than the 5 yr cover he’d put in place by a long shot. I sent him an email & told him what a disgrace he was, but never heard back. So that’s indicative of what can, & did happen…
Thats how the banks rolled. The advisers didnt know any better, they were trained and brainwashed to think their in house products were the best when they were often not.
Not defending the Bank or the Adviser, but remember that they didn’t have an option. The only insurer on the APL was their own. So there is no comparison, there is no other option regardless of price. Is this the fault of the adviser though? If you think it is, go to CBA and ask them to sell you a NAB mortgage and ANZ credit card. The Bank didn’t differentiate between advice and product, they just wanted sales!
I normally back the banks in with APRA’s and ASIC’s obsession to bring them down every day but this does appear to be a really low act by WBC, St George, BOM and BT so on this occasion – they got their right whack. Sucked in!
The management behind the scheme though, who’ve no doubt been paid thousands in bonuses, need to be chased up and have their bonuses clawed back – just like independent retail advisers do.
Good win for the ambulance chasers. A minimum of 40% of $30 million is not to be sneezed at.