Time for banks to pay up on fees: Maurice Blackburn announces legal action against 12 banks
12 May 2010
Twelve major Australian banks are facing mass legal action over bank penalty fees in a cluster of potential class actions announced today. Leading class action lawyers Maurice Blackburn will conduct the legal action to be funded on a 'no-win no fee' basis by litigation funder IMF Australia Ltd and its subsidiary Financial Redress.
The action against the banks centres on 'exception' fees* - charges made against customers who have had dishonoured cheques, have had cheques over their limit "honoured", or gone over their credit limit or made late payments on their credit cards.
Maurice Blackburn Chairman Bernard Murphy said: "The Reserve Bank has stated that banks took $1.2 billion in 'exception fees' in 2008 alone. They charged between $25 and $60 for some transactions when the true cost is probably less than $2 per transaction. Millions of Australians are out of pocket and deserve to be compensated for this overcharging."
"It's time the banks reimbursed their customers," he said. "It is simply unfair that a bank could charge, say $40, for going $10 over the limit on credit card when the actual cost to the bank is under a dollar".
The banks who are proposed to be defendants in the class actions are ANZ, Bank of Qld, Bank of SA, BankWest, Bendigo Bank, CityBank, Commonwealth Bank, HSBC, National Australia Bank, St George, Suncorp and Westpac.
The proposed class actions will allege that charging such exception fees is illegal because these fees penalise the customer for breaching a term of the contract (eg. going overdrawn or paying late) when by law, parties to a contract can only recover their actual costs of a breach. Because the amounts charged are so inflated they are arguably illegal and customers are entitled to a refund.
*exception fees are; late payment fees on credit cards, dishonoured cheques, going over credit limits, late loan payments.They do not include ATM fees monthly account fees. For full details and 'frequently asked questions" go to the financial redress website.