Australia’s largest-ever consumer class-action lawsuit, in which customers of several banks are fighting for the return of more than A$240 million (US$220 million) in fees, began in Melbourne yesterday.
Law firm Maurice Blackburn is representing about 43,500 Australia and New Zealand Bank (ANZ) customers who believe a range of charges they paid were excessive, in the first of several hearings planned as part of the case.
Their lawyers argue that the honor, dishonor, late payment and over-limit fees — usually a A$25 to A$35 charge — were exorbitant and unfair penalties rather than fees for services, and did not reflect the actual cost to the banks.
An honor fee is levied when an informal overdraft facility is exceeded. A dishonor fee is charged when a regular payment to another account cannot go through for lack of funds.
“So you might be a dollar over on your account or a day late in your payment and the banks will slug you with a fee that’s out of all proportion to what it costs them for that minor transgression,” said Andrew Watson, a lawyer for Maurice Blackburn.
“It’s time for ANZ Bank customers to have their day in court,” he said.
The ANZ case relates to fees worth an estimated A$57 million.
ANZ, the nation’s third-largest bank, is the first of eight major banks to go to court as part of the case, which involves more than 185,000 customers who are trying to recover the “excessive” fees. The charges, which for some banks were as high as A$60, often left customers out of pocket by hundreds of dollars over the six years up to 2010.
“The fact that the banks have dropped some of their charges is a good thing and to be welcomed, but even then, some of those fees are still too high and are still the subject of this action,” Watson said.
Yesterday’s Federal Court action follows a ruling by the nation’s highest court in September that consumers could challenge a wide range of fees, overturning an earlier lower court ruling that limited the case to credit card charges.
The class actions are being funded by Bentham IMF (Australia), a publicly listed litigation fund, which has said the case is the world’s largest class action in terms of participation.
ANZ has the highest number of customers involved and is expected to vigorously defend itself, claiming it was entitled to impose fees on customers. The other banks involved are BankSA, Bankwest, Citibank, Commonwealth Bank of Australia, National Australia Bank, St George and Westpac.
In a similar case in the UK in 2009, the Supreme Court ruled in favor of unauthorized overdraft charges. Consumer groups were dismayed at the ruling, which allowed banks to continue charging customers up to ￡35 (US$57) each time they were overdrawn without permission.
Watson said if the consumers were successful in the case against ANZ, which is expected to last three weeks, it would have implications for other financial institutions and companies.
“We have currently filed against eight major lending institutions, starting with ANZ, and if we’re successful against ANZ then the same principles will be highly influential upon those other cases,” he said.
The case could “constitute a precedent not just for the banks that we’ve used but for other financial institutions who are levying similar fees and exceptions charges,” he added.