CBA faces class action over insurance advice

In a statement to the ASX on Friday, the Commonwealth Bank said class action proceedings had been filed against its advice subsidiaries Commonwealth Financial Planning Limited (CFPL) and Financial Wisdom Limited (FWL) by Shine Lawyers in the Federal Court of Australia.

CBA said the case related to “certain CommInsure life insurance policies recommended by financial advisers appointed by CFPL and FWL. The proceedings have also been brought against the Colonial Mutual Life Assurance Society Limited”.

CBA said it was reviewing the claim and would provide updates to the market as required.

A spokesperson for Shine confirmed the case related to a series of class actions flagged last month by the compensation law firm, which related to advice customers across a number of major institutions being charged excessive life insurance premiums.

The law firm also filed suit against a number of AMP subsidiaries in July and flagged it would look to target BT as part of the same series of actions.

“We argue all three financial services providers behaved in a way that was unfair and illegal,” Shine class actions practice leader Craig Allsopp said at the time.

“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.”

According to information on the firm’s website, Shine believes “thousands” of CommInsure policy holders could have been “unlawfully overcharged” through sales of policies through CBA’s advice arms.

“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 law firm stated.

“[Advisers] were incentivised through commissions and other financial and non-financial benefits to recommend insurance through CBA’s related party CommInsure Limited, resulting in their clients paying unfairly higher premiums.

“We believe these clients should be compensated for the excess premiums they paid as a result of this unethical financial advice and conduct.”