The Commonwealth Bank of Australia is facing a class-action lawsuit over insurance advice that its subsidiaries gave to clients.
In a statement to the ASX on Friday, CBA said that class-action proceedings had been filed in the Federal Court of Australia against its subsidiaries, Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL), according to a report by Independent Financial Advisor.
According to CBA, the case involves “certain CommInsure life insurance policies recommended by financial advisers appointed by CFPL and FWL.” Proceedings have also been brought against the Colonial Mutual Life Assurance Society Limited, CBA said.
The bank said it was reviewing the claim and would provide updates as needed, IFA reported.
A spokesperson for Shine Lawyers, which filed the proceedings, told IFA that the case related to a series of class actions regarding advice customers of a number of major institutions being charged excessive life insurance premiums. The firm has also filed suit against several AMP subsidiaries and said it would look to target BT in the same series of class actions, IFA reported.
“We argue all three financial services providers behaved in a way that was unfair and illegal,” Shine class actions practice leader Craig Allsopp said in July. “The sheer number of people affected by these premium rorts shows we’re not just talking about a few bad apples, but systemic misconduct in the industry.”
Shine believes that thousands of CommInsure policyholders may have been “unlawfully overcharged” through policy sales by CBA’s advice subsidiaries, according to the law firm’s website.
“It is alleged that these financial advisers did not act in their clients’ best interests, by failing to inform their clients that they could obtain substantially similar or better insurance policies from alternative insurers for lower premiums,” the firm said.
Shine alleged that advisers were incentivised “through commissions and other financial and non-financial benefits” to recommend insurance through CommInsure.
“We believe these clients should be compensated for the excess premiums they paid as a result of this unethical financial advice and conduct,” the firm said.
