MONTREAL -- Those insured by Desjardins could recover all of the premiums collected for loan, life and disability insurance automatically included in the repayment of their student loans.
The financial institution and Option consommateurs have reached a settlement in a class action suit, which would reimburse $9.5 million.
The consumer rights association criticized Desjardins for having imposed insurance on students who had started paying their loans, but without having negotiated a repayment agreement with them within six months of completing their studies.
"It is important to ensure the consent of the people concerned before making them pay for insurance," said Option consommateurs lawyer Sylvie De Bellefeuille.
The agreement between Desjardins and Option consommateurs must be approved by the court on May 13. If the settlement gets the green light, people who paid insurance premiums between Au. 2, 2014 and March 31, 2021 will be reimbursed.
"On the one hand, members will receive 100 per cent of what they paid. The other thing is that for most people, they won't have to take any steps to get reimbursed. It's difficult to have better regulations," said De Bellefeuille.
Desjardins members will receive the compensation directly in their account. For ex-clients, a check will be mailed to them.
However, this agreement does not automatically cancel the insurance, said De Bellefeuille.
These people must have taken out a student loan guaranteed by the Quebec government with a Desjardins caisse.
In addition, Desjardins must have sent a repayment agreement, the terms of which were not changed before the first payment and which took effect after Aug. 2, 2014, Option consommateurs said in a news release.
In 2017, Desjardins Securite Financiere reached an agreement with the Autorite des marches financiers that imposed a penalty of $1 million for this practice. However, no compensation was offered to the insured at that time.
-- this report by The Canadian Press was first published Feb. 13, 2021.
