Exception fees unfair: IMF

ANZ has vowed to continue fighting a class action being brought against it by 38,000 of its customers after the High Court ruled certain fees charged by banks could be considered penalties.

The decision paves the way for law firm Maurice Blackburn to argue in the Federal Court that exception fees - honour, dishonour, late payment, non-payment and over limit fees - are penalties and therefore refundable.

Maurice Blackburn is actually seeking more than $220 million compensation for 170,000 customers from eight banks over what it describes as "unfair" and "excessive" penalties.

Andrew Watson, Maurice Blackburn's class actions principal, said the High Court decision represented "an important moment in this case".

"We made a strong case at the High Court recently and we will continue taking it up to the banks to help hundreds of thousands of everyday Australians get back money we believe they shouldn't have had to pay," Mr Watson said.

"We say the fees are excessive and extravagant - far beyond the actual cost of administration to the banks.

"This is an important point of law today, which has expanded the doctrine of penalties, so that the courts will now focus on the reality of these sorts of fees."

The class action, Australia's biggest, is being funded by the IMF (Australia) on a no-win, no-fee basis.

IMF's investment manager James Middleweek said it was time the banks accepted that exception fees were unfair.

"The onus is now firmly on ANZ, and the other banks, to show how fees of typically $30-35 can be justified when a customer is a dollar over or a day late settling an account.

"The fact that many banks have since eliminated or slashed these fees will make that task even harder," Mr Middleweek said.

In a statement issued after the High Court ruling, ANZ said the High Court decision "effectively expands the law of penalty with implications for many Australian businesses".

The bank made it clear it had no intention of finding a swift resolution to the matter, with ANZ Australia CEO Philip Chronican indicating it was the first step in a case that would continue into next year at least.

"This action is still at the preliminary stages and today's judgment does not provide a resolution for the class action participants," Mr Chronican said.

"The matter will now return to the Federal Court; the High Court has not determined whether ANZ's fees are penalties.

"Neither today's decision nor the earlier December 2011 Federal Court decision has considered whether the fees in question were excessive."

In its judgement the High Court found: "The fact that the honour, dishonour, non-payment and over-limit fees were not payable for breach of contract did not prevent them from being characterised as penalties.

"It will be for the Federal Court on the further hearing of the matter to decide whether these exception fees are penalties."

>>Read the judgement

CLASS ACTION TIMELINE

  • Sept 22, 2010: First bank fees class action filed against ANZ
  • Dec 5, 2011: Justice Gordon in the Federal Court finds that late payment fees are capable of being penalties, but finds for ANZ on other fees
  • Dec 16: Class actions filed against Commonwealth, Westpac, NAB and Citibank
  • Dec 22: Maurice Blackburn appeals adverse findings in Justice Gordon's December judgment
  • Feb 1: Class action filed against Westpac subsidiaries St George and BankSA
  • Apr 18: Class action filed against Bankwest
  • May 11: High Court grants leave to appeal Justice Gordon's judgment of December 5.
  • Aug 14: High Court hears appeal from Justice Gordon's judgment of December 5.
  • Sept 6: High Court rules that bank fees can be considered penalties.

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