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The law firm has targeted the major brokerage over the efficacy of third-party insurance policies.
Law firm Shine Lawyers confirmed that it has filed a class action lawsuit in the Federal Court against major brokerage Aussie Home Loans on behalf of “up to 30,000 Aussie Home Loan mortgage holders” over insurance policies.
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The insurance policies in question – Mortgage Protection Plan or My Mortgage Plan – were alleged to have “little to no value” and that home owners were misled into purchasing the product, according to the law firm.
Kione Johnson, Shine Lawyers’ class actions practice leader, stated the claim will allege that mortgage holders were “sold a junk policy”.
“The policy promised mortgage holders assistance for home loan repayments in the event of illness or injury, loss of employment or death,” Johnson added.
“We allege it was an unnecessary expense given most customers may have already held life insurance policies that offered them this security and coverage, and/or because Aussie’s policy only provided cover in a limited range of circumstances.”
Shine Lawyers informed that the class action is being funded by UK-based financial institution Woodsford.
Woodsford Australia director Alex Hickson stated that the alleged insurance policies were “not in the interests of people who obtained them”.
As part of the action, the law firm will be examining Aussie Home Loans brokers who sold these policies to determine whether or not there has been a breach of their best interests duty and whether selling the policies “amounted to misleading or deceptive conduct”.
The investigation was originally opened against Aussie Home Loans in 2022, which sparked responses from the major brokerage itself and the provider of these insurance policies ALI Group.
In his response at the time of the class action claims, ALI Group chief executive Huy Truong labelled the allegations about the worth of the policies as “baseless”.
In a statement issued to The Adviser upon the filing of the class action, an Aussie Home Loans spokesperson stated: “We are aware of a class action involving aspects of an insurance product, although we do not issue insurance ourselves."
“Aussie connects consumers with a wide range of financial products through our approved panel of providers.
“We are currently reviewing the full details of the class action in relation to this insurance product and have no further comment at this time.”
ALI Group also provided a statement, confirming that it will "vigorously defend [the] class action lawsuit commenced by Shine Lawyers".
"The legal action makes allegations about selling practices and product design for an unspecified class of claimant.
"For over 20 years, ALI has helped protect over 230,000 policyholders from financial hardship.
"To date, over $150m in benefits have been paid to ALI policyholders who have suffered loss of employment, accidents, serious illness, or worse. Many of these claimants have expressed their thanks to ALI and their mortgage broker for offering the policy.
"As life events continue to impact policyholders, ALI will continue to pay more claims."
[RELATED: Aussie Home Loans in potential class action lawsuit]
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