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More than 750,000 Australians will receive notice from the Federal Court that they may be eligible to join Slater and Gordon's (ASX: SGH) consumer credit class action against Commonwealth Bank (ASX: CBA).
The law firm is representing customers of Australia's largest bank who were allegedly sold "junk" credit card and personal loan insurance that was of little or no value, and that many customers would never have been eligible to claim against.
The class action alleges that many people were led to believe that the insurance was compulsory or free, while others didn't even know they had been sold it.
The insurance was often sold to people with disabilities, people who were unemployed or people who were chronically ill and therefore likely ineligible to claim, according to SGH.
Slater & Gordon says CBA has admitted these products were of little value, even though they were sold to hundreds of thousands of their customers.
"While the Big Four bank said they would provide refunds as part of a remediation program, only a small portion of customers were compensated, despite ending the sale of these products in March 2018," claims Slater & Gordon.
Slater and Gordon Practice Group Leader Andrew Paull says the class action will give a voice to those who were vulnerable and were allegedly duped into buying worthless insurance.
"The reprehensible behaviour of the Big Banks which preyed on vulnerable people in the community needs to be called out, and the customers need to be compensated," said Paull.
"This move to return only a small portion of its customers premiums seems to have been a tokenistic effort to protect the bank's brand, rather than a genuine attempt to make good its past wrongdoing."
It follows a similar Slater and Gordon class action settled by the firm in late 2019 that alleged NAB customers had been mis-sold personal loan and credit card insurance, which saw 50,000 customers compensated $49.5 million.
Shares in CBA are down 1.73 per cent to $82.25 per share at 1.34pm AEDT.
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