Westpac life insurance bill could hit $100m
WESTPAC is being sued for allegedly overcharging life insurance policyholders in a claim that could hit $100million.
The case was filed by Shine Lawyers in the Federal Court and will allege the bank took advantage of customers through referrals to Westpac financial planners who routinely signed customers up for more expensive Westpac life insurance products.
Jan Saddler from Shine says customers were charged 4.5% more for the Westpac packages than if they obtained the same insurance elsewhere.
"We believe Westpac took advantage of its relationships with customers to boost its bottom line by signing clients up to their own in-house insurance which they knew was more expensive,” Ms Saddler said.
The charges, paid since 2010, could involve tens of thousands of customers.
"The bank and financial planners have an obligation to act in the best interests of their clients. In this case Westpac has abused its powers and the trust of customers,” she said.
Customers who received financial advice and life insurance since 2010 may be entitled to join the action and recover compensation if they:
received financial advice from a financial advisor of Westpac, BT, St George Bank, Bank of Melbourne or BankSA; and
obtained a life insurance policy from Westpac, BT, St George Bank, Bank of Melbourne or BankSA as a result of that advice.
Ms Saddler said the action would seek to return millions of dollars to customers.
"This action is about accountability and ensuring customers who have been duped have the opportunity to stand up and demand more from an institution they entrusted to act in their interests.”
Lead plaintiff Greg Lenthall said "Rather than setting us up for the future and looking after our interests, they just saw us as dollar signs. I wasn't a customer, I was just a dollar sign to them.
"It's not about the money, it's about trust and the fact that we had faith that they were acting in our interests. All the while, they were abusing this trust to boost their profit,” he said.
"We want to see the bank held accountable for its actions and for taking advantage of its customers. It's the little people like me that allow companies like this to exist and they need to stop treating us with such disdain.”
Financial planning and insurance industry specialist Brian Boggs said Westpac's conduct was far from surprising given the behaviour he had seen from some of Australia's biggest banks.
"It is common knowledge that the big banks try to sell their in-house life product even though there are dozens of other life insurers charging far lower premiums,” said Mr Boggs.
"Based on over 500,000 quotes analysed by Lifecompare, it seems that big bank cover averages 26.8% more than the cheapest product in each category,” he said. "The alleged Westpac overcharge may even go beyond this.”
Westpac customers who believe they may have been impacted should contact Shine Lawyers on 13 11 99 or email firstname.lastname@example.org.