A $100 million class action has been filed against Westpac Banking Corporation over claims it overcharged customers for life insurance.

Shine Lawyers filed the action in Federal Court yesterday, alleging the bank took advantage of its customers through referrals to Westpac financial planners who would then sign them up for more expensive life insurance products.

The bank and its subsidiaries St George, Bank of Melbourne and Bank of SA are accused of charging customers 4.5 percent more for Westpac life insurance packages than they would have been charged if the insurance was obtained elsewhere.

The $100 million class action against Westpac was filed in Federal Court yesterday. (AAP)

Customers who received financial advice and obtained life insurance from a Westpac financial planner from 2010 onwards may be entitled to join the class action if they took that advice and then obtained a policy through them.

Shine Lawyers Class Actions Special Counsel Jan Saddler said the extra charges could impact tens of thousands of customers.

"We believe that Westpac took advantage of its relationships with customers to boost its bottom line, by signing clients up to their own in-house insurance which they knew was more expensive," she said.

St George is a Westpac subsidiary caught up in the class action against its parent bank. (AAP)

"The bank and its financial planners have an obligation to act in the best interests of their clients. In this case Westpac has abused its powers and the trust of its customers."

Ms Saddler said the action would seek to return the millions of dollars in overpaid premiums to impacted customers, as well as any interest or profits made from investments.

“This action is about accountability and ensuring customers who have been duped have the opportunity to stand up and demand more from an institution they entrusted to act in their interests."

Financial planning and insurance industry specialist Brian Boggs said Westpac’s conduct was not surprising given the behaviour he had seen from some of Australia’s biggest banks.

Shine Lawyers have launched a class action against the Westpac Banking Group. (AAP)

“It is common knowledge that the big banks try to sell their in-house life product even though there are dozens of other life insurers charging far lower premiums,” said Mr Boggs.

“Based on over 500,000 quotes analysed by Lifecompare, it seems that big bank cover averages 26.8 per cent more than the cheapest product in each category,” he said. “The alleged Westpac overcharge may even go beyond this.”