Consumers who received life insurance advice from a Westpac aligned financial adviser and purchased a policy based on that advice have been encouraged to join a class action which claims the bank overcharged clients for their life insurance premiums.
The action, which has been filed by Shine Lawyers in the Federal Court of Australia, could result in a total claim of $100 million.
Shine Lawyers stated the action will allege the Westpac Banking Corporation charged clients of bank-based advisers 4.5 percent more in premiums than for the same life insurance product when recommended by a non-aligned adviser.
Shine Lawyers Class Actions Special Counsel, Jan Saddler said the higher premiums had been charged since 2010 and the action would seek to return the overpaid premiums and any interest or profits made from investments.
“We believe that Westpac took advantage of its relationships with customers to boost its bottom line…”
“We believe that 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,” Saddler said.
“The bank and its 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,” Saddler added.
BT Financial Group (BTFG), which provide life insurance products to Westpac, has stated it will be “…defending legal action in relation to its Life Insurance products” and defended its pricing model across different sales channels.
BT Chief Executive, Brad Cooper, said the various sales channels employed by the bank had different services levels and underwriting processes which impacted pricing.
He said BT aimed to make insurance widely affordable and spread the risk of claims across all customers and “…this means that some customers who come through Westpac will get insurance at a lower price than if they went through a different adviser”.
“Through our Financial Planners we accept customers who may have conditions such as high cholesterol or blood pressure and who would otherwise find themselves with a higher premium if they tried to purchase it through an independent adviser,” Cooper said.
“As a result, some customers will pay substantially less, and others will pay a little bit more, but that is how insurance works,” he added.
“…some customers will pay substantially less, and others will pay a little bit more, but that is how insurance works…”
Former adviser and insurance industry specialist, Brian Boggs told Riskinfo he had seen Statements of Advice and Product Disclosure Statements from Westpac bank-advised clients which did not mention the difference in premiums.
Boggs also claimed the advice failed to meet Best Interest Duty requirements in that only one in-house product was considered when providing the advice through the bank channel.
Shine Lawyers stated Westpac customers may be entitled to join the action and recover compensation if they received financial advice from a financial adviser of Westpac, BT, St George Bank, Bank of Melbourne or BankSA; and obtained a life insurance policy from one of those organisations as a result of that advice, since 2010.