Big banks about to take a big hit as customers fight back big time

12 August 2014
Australia’s unfair bank fees class actions are set to benefit all customers who have ever been charged a late fee – not just those that signed up to the original class actions – with open class proceedings being filed by Maurice Blackburn Lawyers today in the NSW Supreme Court.

The result will be that all customers who have ever been charged late payment fees by Westpac, St.George, Citibank, BankSA and ANZ will be eligible to share in an eventual successful outcome, should the class actions prevail.

Andrew Watson, the head of Maurice Blackburn’s class action practice, said the firm’s success early this year against the ANZ on late fees, has opened the door for millions of customers to recoup what is rightfully theirs.

“That victory earlier this year was not only for the thousands of ANZ customers we were acting for, but on behalf of every consumer that has ever been charged a late fee,” Mr Watson said.

“Today we have filed open class actions against Westpac, Citibank, St.George, BankSA and ANZ, and should we succeed, any customer of these banks that has ever been charged late payment fees will have a right to access some compensation for those unfair charges.

“Our case is based on the earlier Federal Court ruling against ANZ. Whilst that judgment is under appeal we think we have a very strong case and that this course of action provides the best safeguard for the rights of all those consumers affected by late fees.”

Mr Watson said the firm planned to extend the action to cover nine financial institutions in all – Westpac, Citibank, ANZ, CBA, NAB, St.George, BankSA, BankWest and American Express.

“What we’re doing today opens the gates of justice to millions more Australians and means that previous estimates of the numbers of people affected and the compensation amounts owed will be dwarfed by the new state of play,” he said.

“This action is a great example of the importance of having a robust and mature class actions regime in place, so that individuals have a genuine opportunity to remedy wrongs that happen on a large scale.”

James Middleweek, from litigation funder Bentham IMF, which has bankrolled the action, said the filing of the open class will include a common fund application.

“These open class proceedings will enable all bank customers who have suffered exorbitant late fees to benefit from a successful outcome to the bank fees litigation,” Mr Middleweek said.

“It is clearly evident from this case that the class action regime in Australia – backed by litigation funding – is the only genuinely effective vehicle to offer commercial redress to people that are subjected to corporate wrongdoing in this way.”

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
  • 2-10 December 2013: Bank fees class action trial against ANZ runs in the Federal Court before Justice Michelle Gordon
  • 5 February 2014: Justice Gordon hands down judgment finding that late payment fees on credit cards are penalties and should be repaid, with no retrospective time limitation on claims. Justice Gordon finds for the ANZ on the other fees.

General information

  • Banks charged Australian households (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.