Westpac, ANZ, CBA share prices dip after class action for 'junk' insurance

The Westpac, ANZ and CBA share prices are down today after news reports the banks face a class-action lawsuit for their insurance products.

| More on:
Liar loan ASX banks banker with calculator tries to make sense of the Big Four banks, indicating tough time ahead for banking shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking GrpLtd (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) share prices are slipping today after a news report the banks are facing a class-action lawsuit for their insurance products.

At market open, the ANZ share price is down 1.8% to $28.35, the Commonwealth Bank share price is flat at $87, while the Westpac share price is down 1.17% to $24.95.  

Big four banks under fire for consumer credit insurance

The big four banks are under fire for their consumer credit insurance (CCI), which is marketed as protecting consumers against late or missed payments.

In reality, the insurance pays out less than 10 cents for each dollar paid in premiums. This is compared to an average of 89 cents for every dollar paid in car insurance premiums.

During the banking royal commission, it was revealed Australia's big four banks were warned by executives and international banks of the dodgy practices more than 10 years ago, but refused to stop selling CCI to customers.

All four of Australia's major banks were hit with class actions over their CCI products, but National Australia Bank Ltd (ASX: NAB) already settled in 2019, paying out $49.5 million to almost 50,000 customers.

ASIC taking Westpac to court

Practice Group Leader at law firm Slater and Gordon, Andrew Paull, told the ABC that CCI had been sold to millions of Australians.

"It's known as junk insurance because for any normal person it's incredibly low value," he said.

"We're talking perhaps one in four Australian households that are being sold a complex and worthless financial product by one of the trusted big four banks."

Meanwhile, the Australian Securities and Investments Commission (ASIC) is taking Westpac to court over its CCI deals, alleging it mis-sold CCI to 400 customers who hadn't agreed to buy it through credit card bundle deals. ASIC is seeking a fine as punishment.

In a statement, Westpac said it was "carefully considering these claims and is committed to working constructively with ASIC through the court process".

Should you invest $1,000 in Telstra Corporation Limited right now?

Before you buy Telstra Corporation Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Telstra Corporation Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 7 February 2025

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

Group of successful real estate agents standing in building and looking at tablet.
Bank Shares

3 things about CBA stock every smart investor knows

This is what investors need to be aware of.

Read more »

A woman in a bright yellow jumper looks happily at her yellow piggy bank representing bank dividends and in particular the CBA dividend
Dividend Investing

Looking to bank the boosted CBA dividend? You better hurry!

On the hunt for passive income?

Read more »

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Earnings Results

Guess which ASX 200 bank stock just crashed 17% amid eroding profits

Investors are punishing the ASX 200 bank stock amid declining profits.

Read more »

Shot of a young businesswoman looking stressed out while working in an office.
Earnings Results

Westpac share price sinks 5% on Q1 update

Investors have been hitting the sell button today. Let's see what is happening.

Read more »

Bank building with the word bank in gold.
Earnings Results

4 ASX 200 bank shares with earnings updates next week

Three of Australia's 'Big Four' banks plus a regional bank will report to the market next week.

Read more »

Animation of a man measuring a percentage sign, symbolising rising interest rates.
Bank Shares

Here's what Westpac says the RBA will do with interest rates next week

Is relief coming at last for borrowers? Here's what the bank is predicting.

Read more »

A woman wearing the black and yellow corporate colours of a leading bank gazes out the window in thought as she holds a tablet in her hands.
Bank Shares

Where could the CBA share price go in the next 12 months — see the latest forecasts

Where will CBA shares go next?

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Bank Shares

CBA share price sinks despite big government news

CBA announced a new government partnership on Friday.

Read more »