Comm Bank facing class action from 700k customers
THE Commonwealth Bank faces a class action from up to 700,000 customers who accuse it of accused of forcing them to pay more for their life insurance by tipping them into its subsidiary, Comminsure.
Documents were filed in the Victorian Supreme Court today alleging the Comminsure premiums were inflated and much higher than other providers.
Shine Lawyers, which is handling the case, said as subsidiaries of the Commonwealth Bank, Colonial First State Investments Limited and CommInsure were "motivated by self-interest''.
It follows criticism at the banking Royal Commission where Commissioner Kenneth Hayne said vertically integrated companies that include both super funds and insurers will need to in future justify decisions to default members into their own life policies.
Shine Lawyers today launched the class action on behalf of hundreds of thousands of Australians who they say were slugged with excessive insurance premiums.
Shine's Rebecca Jancauskas said this was not in their best interests as substantially similar or better policies with cheaper premiums were available through other providers.
"These customers were forced to pay more for life insurance as well as total and permanent disability insurance, and this has eaten into their superannuation," she said.
"Many of these people are approaching retirement and now their nest egg has shrunk as a result of the conduct of Colonial First State Investments Limited.
"This appears to have been a mutually beneficial arrangement that had the effect of putting profits ahead of people."
Ms Jancauskas said the group life insurance industry had been put on notice by the Financial Services Royal Commission, which has called for more oversight of the market.
Commissioner Kenneth Hayne, in his report, said vertically integrated companies that include both super funds and insurers will need to justify decisions to default members into their own life policies."
Charlie Morris, Chief Investment Officer for Asia Pacific at Woodsford Litigation Funding, who is funding the action, said a class action was the best way to deliver justice for those overcharged for insurance.
"Many customers may have lost a few thousand dollars, which would not ordinarily be enough to warrant launching individual court actions," Mr Morris said.
"Class actions like this one ensure justice is accessible and affordable to everyone."
The class action, filed in the Federal Court in Victoria today is open to members of the following superannuation funds;
FirstChoice Personal Super and Pension, FirstChoice Wholesale Personal Super and Pension, FirstChoice Employer Super and Commonwealth Essential Super