After the market had closed yesterday NAB (ASX: NAB) announced that it had reached settlement for a class action.
NAB is one of the four largest banks in Australia in terms of market capitalisation, earnings and customers. However, in 2019, it was Australia’s largest lender to businesses and has operations in wealth management and residential lending. It also operates the online-only Ubank.
NAB’s Class Action Settlement
NAB announced it has agreed to settle a class action that was brought against it by Slater & Gordon (ASX: SGH) regarding Consumer Credit Insurance (CCI).
These legal proceedings were commenced in September 2018 against NAB and MLC in the Federal Court of Australia and relate to two CCI products, NAB Credit Card Cover (NCCC) and NAB Personal Loan Cover (PLC).
The settlement between NAB and Slater & Gordon involves a payment of $49.5 million and is subject to the approval of the Federal Court of Australia.
The payment amount was provided for in NAB’s September 2019 full year financial statements.
NAB Chief Legal and Commercial Counsel Sharon Cook said: “The settlement is the right thing to do for our customers and shareholders.
“As we have said, we can only move forward if we deal with the past, so that we can earn trust among customers and the broader community and grow confidence in the future of NAB.
“It is important to note NAB no longer sells CCI products through any of its banking channels, and has implemented a remediation program for CCI customers.”
Pending Federal Court approval, settlement payments to any individual class members will be managed and determined by Slater & Gordon.
The Royal Commission has been expensive for NAB to refund customers. In FY19 NAB paid $1.1 billion of customer related remediation and in FY18 it paid $261 million. However, banks have warned that FY19 wasn’t the end of the potential customer remediation announcements.
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