ANZ class action: lawyers say partial victory opens way for claims against other banks

Updated

The ANZ bank may be liable to pay its customers "tens of millions of dollars", according to the law firm that led a successful class action against the bank over its fees.

The Federal Court today handed a partial victory to ANZ customers who joined in a class action to recoup $57 million in fees.

While consumer groups have claimed a significant win, ANZ says the implications for the bank and its customers are far from clear.

The court ruled that the late payment fees the bank charged customers were extravagant, exorbitant and unconscionable.

But Justice Michele Gordon said that other fees the bank charged, including honour and dishonour fees, and over-limit fees on credit cards, were reasonable.

ANZ and Maurice Blackburn, which was running the class action on behalf of 43,500 ANZ customers, have been directed to discuss damages and penalties for the finding.

Andrew Watson, from Maurice Blackburn, says while establishing the amount owed to affected customers would take weeks and the money would likely not be repaid "voluntarily", he expected it to stretch into the "tens of millions of dollars".

The late fee component is thought to make up about a quarter of the total $57 million claim, taking the potential windfall down to $14.5 million.

"Today is, on any analysis, a huge victory for the customers of the ANZ, for the customers of all Australian banks and for consumers generally," Mr Watson told media in Melbourne.

"This will be a significant victory for those customers, but also for all of those customers who are involved in the other seven class actions we have against other banks and financial institutions, and in terms of the principles it establishes, a significant victory for Australian consumers everywhere."

Ruling throws doubt on fairness of other late payment fees

The ruling opens the way for customers of other banks to claim unfair treatment on fees.

"Wherever there are other late payment regimes, they will need to be examined carefully as a result of this decision," Mr Watson said.

Sorry, this video has expired Video: Amy Bainbridge reports on the decision (ABC News)

"I have no doubt the other banks will try to allege their terms and conditions are in some way different, but from our perspective, the principles that have been established in this case make it pretty clear that late payment fees charged by all of the banks will be found to be a penalty."

The action, which began in September 2010, was the first of a series of bank-fee class actions against a total of eight banks.

The fees include honour and dishonour fees on bank accounts, over-limit fees, and late payment fees on credit cards.

Maurice Blackburn argued that charging the exception fees was unconscionable, unfair and unjust.

The lawyers claimed the bank charged exorbitant fees of $20 to $45 for services that cost them only a few cents or a few dollars to administer.

"Her Honour found that the costs to the bank in most instances were 50 cents, in a few instances they were higher than that, in one instance it was $5.50 - so that gives you some indication of the scale of the difference," Mr Watson said.

ANZ boss says implications of ruling unclear

ANZ chief executive Philip Chronican said he was pleased the court found honour, dishonour, over-limit and non-payment fees were not penalties.

"We've consistently been of the view that, while these fees have attracted some attention and at times are unpopular, we believe that they were legal and a legitimate fee for service and the Federal Court has agreed with that," he said.

However in relation to late payment fees, he added: "The implications of today's decision for ANZ and its customers are still far from clear and it is likely to be some time until this matter is finally resolved."

"Ultimately this is an issue about our customers. What we've been working hard to do over recent years is that we build a fair relationship with our customers and we listen to feedback," he said.

"As a result of that, in 2009 we reduced a number of fees, 27 fees were abolished, we reduced the overdrawn and dishonour fees and we lowered the late payment fee which is the one at issue today from $35 to $20 and removed these fees altogether for account holders that were recipients of government benefits.

"So while I don't think today's judgment is the end of the matter, it is clearly a significant step forward and one that hopefully gets us closer to having this issue resolved and put behind us."

Choice describes ruling as 'a significant win'

But the chief executive of consumer group Choice, Alan Kirkland, says it is a good result.

"Obviously we were hoping for better but this is a significant win," he said.

"Obviously the law was unclear in this area before and at least what we now know is that the late payment fees the banks had been charging prior to this class action were unreasonable. So this is going to very clearly keep them in check."

The class actions are funded by publicly listed litigator Bentham IMF Australia.

Bentham IMF says it believes late payment fees make up approximately a quarter of the value of all of the claims brought by members of the class action against the ANZ Bank.

It says it will try to speed up the recovery of those fees.

In 2012, a High Court decision paved the way for the trial in the Federal Court.

A former ANZ chief executive, John McFarlane, slammed many of the fees in question as "unsustainable" at a business lunch in 2007.

Maurice Blackburn has also issued proceedings against Citibank, Commonwealth Bank, National Australia Bank, Westpac, St George, Bank SA and BankWest.

Last week, ANZ said it was refunding roughly $70 million to about 235,000 of its home loan customers after overcharging them for interest repayments.

Do you know more? Contact investigations@abc.net.au

Topics: banking, industry, business-economics-and-finance, courts-and-trials, law-crime-and-justice, australia

First posted