High Court victory for customers in bank fees class action

6 September 2012
The High Court of Australia has today ruled that unfair bank fees can be considered penalties, in a huge win for customers involved in the class actions being run by Maurice Blackburn Lawyers, backed by litigation funder IMF (Australia) Ltd.

The High Court of Australia has today ruled that unfair bank fees can be considered penalties, in a huge win for customers involved in the class actions being run by Maurice Blackburn Lawyers, backed by litigation funder IMF (Australia) Ltd.

Maurice Blackburn class actions Principal Andrew Watson said the decision clears the way for Maurice Blackburn to return to the Federal Court and argue that the fees are penalties, and therefore void and refundable.

"This High Court action represented an important moment in this case for the 170,000 customers currently involved in the class actions we are trying to recover a total of $223 million," Mr Watson said.

"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 actions are being funded by IMF (Australia) Ltd, on a no-win no-fee basis for participants. IMF (Australia) Investment Manager, James Middleweek, said the class action is giving people an opportunity to take on the might of the banks.

"Today's High Court decision is a fantastic win for our 170,000 class action members. It's still not too late for people to sign up.  Despite already being the world's largest class action in terms of participation, we're still only scratching at the surface of the number of consumers and small businesses affected by these unfair charges," Mr Middleweek said.

"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.

"It's high time the banks accepted that what they did was unfair, and make redress."

 

History of the bank fees class actions

  • 22 September 2010: First bank fees class action filed against ANZ
  • 5 December 2011: Justice Gordon in the Federal Court finds that late payment fees are capable of being penalties, but finds for ANZ on other fees
  • 16 December 2011: Class actions filed against Commonwealth, Westpac, NAB and Citibank
  • 22 December 2011: Maurice Blackburn appeals adverse findings in Justice Gordon's December judgment
  • 1 February 2012: Class action filed against Westpac subsidiaries St George and BankSA
  • 18 April 2012: Class action filed against Bankwest
  • 11 May 2012: High Court grants leave to appeal Justice Gordon's judgment of 5 December 2011
  • 14 August 2012: High Court hears appeal from Justice Gordon's judgment of 5 December 2011
  • 6 September 2012: High Court rules that bank fees can be considered penalties

 

Estimated claim size

Bank

Group members

Estimated claim size

Range of fees charged

ANZ

38,000

$50m

$20 - $45

BankSA

1,500

$2m

$20 - $45

Bankwest

6,600

$10m

$10 - $50

Citibank

10,000

$15m

$7 - $50

Commonwealth

45,000

$56m

$20 - $35

NAB

30,000

$38m

$25 - $60

St George

9,000

$14m

$20 - $45

Westpac

30,000

$38m

$30 - $50

TOTAL

170,100

$223m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General information

  • Banks charged Australian households (that is, not including businesses) $652 million in exception fees in FY2010, down from $1.3 billion in FY2009 and $1.2 billion in FY2008
  • Banks charged Australian businesses $112 million in exception fees in FY2010, down from $197 million in FY2009 and $209 million in FY2008
  • Banks earned $4.2 billion in fees (all fees, not just exception fees) from households in FY2010, a drop of 16% from the previous year
  • Banks earned $6.9 billion in fees (all fees, not just exception fees) from businesses in FY2010, an increase of 13% from the previous year
  • The big four banks posted a combined profit of $24 billion for FY2011

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