Consumers put ANZ on trial in federal court over unfair bank fees

The first of the major Australian banks goes on trial this morning in the Federal Court, Melbourne, in a landmark case providing access to justice for thousands of Australians affected by unfair bank and credit card fees.

Justice Michelle Gordon will today commence hearing ANZ customers’ claims for recovery of honour, dishonour, late payment and over-limit fees that plaintiff lawyers Maurice Blackburn argue are exorbitant, unfair penalties rather than fees for services.

Andrew Watson, who heads Maurice Blackburn’s national class actions practice, says more than 185,000 people have signed up and will be watching the next three weeks of the case closely, with the other banks expected to be directly affected by the result of the ANZ trial.

“We have currently filed against eight major lending institutions, starting with ANZ, and if we’re successful against ANZ then the same principles will be highly influential upon those other cases,” Mr Watson said.

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

“This case will mean more than 185,000 Australians will be looking to recover more than $240 million in unfair fees that were charged by the banks over a six-year period.

“We’ve already seen many of the banks in question, including ANZ, drastically reduce or totally abolish these fees, and the High Court of Australia has ruled that such fees may be penalties. Our case is strong.”

The class actions are being funded by Bentham IMF (Australia) Ltd, on a no-win no-fee basis for participants.

Bentham IMF Investment Manager, James Middleweek, said the onus is now firmly on ANZ to show how fees of $35 can be justified when a customer is a dollar over or a day late settling an account.

“ANZ and the other banks have had plenty of opportunities to accept that what they did was unfair and to make redress, but they haven’t taken those opportunities. Now they will go to trial and the court will decide, in what is shaping as a landmark moment in Australian consumer law,” Mr Middleweek said.

“Without a robust, well-funded class action regime, there is no way that 185,000 everyday Australians would have the opportunity or means to challenge these unfair fees.”

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 43,500 $57m $25 – $45
BankSA 1,500 $2m $30 – $45
Bankwest 7,200 $11m $25 – $50
Citibank * 12,900 $19m $10 – $40
Commonwealth 48,000 $60m $20 – $35
NAB 30,700 $39m $20 – $60
St George 10,000 $15m $30 – $45
Westpac 31,500 $40m $25 – $50
TOTAL 185,300 $243m

* Citibank includes 1,900 BOQ and Suncorp credit card customers for whom it is the actual credit provider

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

Maurice Blackburn is an associate member of CFA