Group Credit-Life Insurance. A Consumer Association Had No Standing To Sue

The consumers association commenced proceedings to nullify the group credit-life insurance contracts taken out with respect to loans granted by the defendant bank. The plaintiff argued that the defendants did not allow clients to choose the insurance carrier and that they also charged premiums in excess of their regular market value. The consumers association also claimed the reimbursement of the excess which had allegedly been collected in the past three years.

The defendants, BBVA Banco Francés and Consolidar Cía. de Seguros de Vida S.A., asserted, among other defenses, the plaintiff’s lack of standing to sue.

Tribunal A of the Commercial Court of Appeals of the City of Buenos Aires confirmed the first instance judgment, which had admitted the defense of lack of standing to sue.

The Court found that the bank granted to each client the possibility of choosing between different insurance carriers. Thus, it was clear that the relationships originated in each loan occurred between each client and the bank, being therefore no relationship among bank clients. The Court concluded that the claim brought by the consumers association was based on individual interests.

The Court also held that the beneficiary of the insurance policies was the bank and that it was therefore reasonable that the bank takes part in the decision of which company is to underwrite the risk.

In short, since there were different contracts, between different persons, with different terms and conditions each (e.g., amount borrowed, term to pay back the loan, installments comprising expenses and insurance premiums), the uniformity that would allow a consumers association to sue did not exist. The Court concluded that the association was not trying to limit or stop an event that was affecting uniform individual rights and that, therefore, there was not a collective issue at stake.

The Court followed a similar ruling of September 2, 2010 (in re “ADECUA v/ Toyota Compañía Financiera s/ ordinario”) and confirmed the first instance judgment which had rejected the plaintiff’s standing to sue.

This decision is not final yet.