NAB, MLC to pay $49.5m to customers after class action
Bank giant the National Australia Bank and its former wealth arm MLC have reached a settlement over a class action in which they were accused of selling junk insurance on credit cards and personal loans.
This afternoon they agreed to payout $49.5 million to customers wrongly sold the products.
Payouts per customer are expected to be between a couple of hundred dollars and just over a thousand, depending on how much insurance they paid.
The class action is still open to new members who think they were impacted by the products and already has 25,000 members.
The matter was originally set to go to trial in Melbourne's Federal Court next month.
The parties will now provide draft documents outlining the settlement by November 29. The result will be finalised at a Federal Court hearing on January 30.
In September last year Slater and Gordon filed a Federal Court class action against NAB and subsidiary MLC for credit card and personal loan customers who were sold dodgy insurance they were allegedly unable to collect on.
Some alleged victims include students, the unemployed and those on disability pensions who were unlikely to collect on the insurance.
Slater and Gordon have previously said more than 400,000 customers were sold the credit card and personal loan insurance.
The case was launched on the back of revelations at the financial services royal commission.
"The claim is based upon allegations that NAB and MLC have engaged in unconscionable conduct by selling (consumer credit insurance) to persons who were ineligible to claim under the terms of, or otherwise highly unlikely to benefit from, the insurance policy," Slater and Gordon said at the time.
"It is also alleged that NAB engaged in misleading and deceptive conduct in relation to the way CCI was sold to persons."
The action involved persons sold NAB Credit Card Cover (NAB Cover) at any time since September 26, 2012 and those sold NAB Personal Loan Cover (NAB PLC) at any time since June 13, 2013.
The action is being run on a no win, no fee basis.
The overall toll from misdeeds exposed in the financial services royal commission keeps growing for NAB. In October NAB revealed it was setting aside an additional $1.3 billion in an effort to pay back customers wronged by the variety of bank misconduct revealed at the commission. This took its total provisions for misconduct repayments to $2 billion
Earlier this month NAB revealed annual profit fell 14 per cent to $4.8 billion due in part to customer repayment costs.
Since the financial services royal commission the lender has employed a new chair in Phil Chronican who is also serving as chief until next month when veteran banker Ross McEwan joins the bank.