Up to one million ANZ, Westpac and Commonwealth Bank customers will share in settlements worth $126 million after being sold consumer credit insurance of little use.
The CBA has agreed to pay $50 million, ANZ $42 million and Westpac $29 million, without admitting any wrongdoing, over the sale of insurance when customers took out credit cards or personal loans.
A $5 million payment is being made by QBE Insurance regarding policies sold in relation to ANZ products.
The settlements remain subject to court approval and follow similar action against National Australia Bank in 2019 which netted 50,000 customers $49.5 million.
Lawyers Slater and Gordon said many of the banks' customers were unlikely to be able to make a claim because they were already unemployed or had pre-existing health conditions or disabilities.
Some never provided their consent to purchase the policies, were not informed that the insurance was optional, or were not told they would be charged for it.
Lead CBA plaintiff Kristy Fordham, from Queensland, was sold loan protection without requesting it despite not working at the time and suffering from serious health conditions, making her ineligible to claim.
"I believe the bank knew full well that we couldn't benefit from their products, but they deliberately sold them to us anyway," she said.
"We were all so vulnerable or else we wouldn't have needed loans from them in the first place, yet they took advantage of that, in my opinion."
Lead ANZ plaintiff Tracey Reilly, from Queensland, was sold ANZ Credit Card Protection policies without consenting but when she came to make a claim was told she was ineligible because she had pre-existing symptoms that were later diagnosed as cancer.
"I'm glad this has been completed with a great result," she said.
"Now at least people can have a portion of what they paid returned to them, as some people are going through a rough financial time, so every dollar will help."
Lead Westpac plaintiff Roger Kemp, from Western Australia, could not recall taking out his Flexi Loan Repayment Protection insurance but was also ineligible when the opportunity came to make a claim.
Slater and Gordon said customers eligible for a share in the settlements would be contacted directly.
"Taking on the big banks was never going to be easy but we are pleased that we have been able to resolve these group proceedings and that eligible customers will benefit," Class Actions Senior Associate Alex Blennerhassett said.
"Class actions are one way people can take on big corporations, including Australia's Big Four banks."
In statements the ANZ, the CBA and Westpac noted the settlements.
The ANZ stressed in a statement that the settlement was without admission of liability.
CBA said the case related to insurance sold between January 2010 and March 2018.
Westpac said the settlement was announced in its financial results this year and related to insurance sold before 2019.