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ANZ Bank has said it will "vigorously" defend the first of what is expected to be a brace of class actions. The litigation is seeking recovery of more than $250 million from 12 banks over allegedly unlawful penalty fees.
Class action law firm Maurice Blackburn opened the litigation in Federal Court yesterday with a claim for $50m, plus interest, on behalf of 27,199 individuals and businesses, the holders of about 40,000 ANZ accounts.
The claim for honour and dishonour fees, as well as over-limit and late payment charges on credit cards, is confined to the normal six-year limitation period for civil actions.
Bernard Murphy, the law firm's chairman, said the case was "very strong", and would allege the fees were illegal and the bank's action in levying them was unfair under the ASIC, Trade Practices and Fair Trading Acts.
He said Maurice Blackburn and litigation funder IMF Australia, which will pick up 25 per cent of the winnings but is backing the case on a "no-win, no-fee" basis, had so far attracted 150,000 claimants.
A further "significant" spike was expected in the number of participants in the ANZ claim.
"The liability is not capped because people can join the (ANZ) case until it's resolved," Mr Murphy said.
"We can't guarantee success, but we think we have a good case."
ANZ acknowledged yesterday it had been served with a statement of claim, but indicated it would put up a strong fight.
Phil Chronican, CEO for Australia, said ANZ had recognised the fees were unpopular and had introduced a simplified fee structure last December.
"It's a big leap, however, for a fee to go from being unpopular to being unlawful," Mr Chronican said.
"ANZ will be defending this claim vigorously and we plan to hold IMF accountable for the impact of its actions."
Other potential defendants in coming months include Bank of Queensland, Bank SA, Bankwest, Bendigo Bank, Citibank, Commonwealth Bank, HSBC, National Australia Bank, St George, Suncorp and Westpac.
The legal basis of the actions will be similar -- that the fees, which varied but were typically about $50, were not a genuine fee for service or costs incurred but a penalty, and therefore illegal.
Reserve Bank figures show income from penalty fees was running at about $1.2 billion a year at its peak, including $1bn from households.
Total bank fees in 2009 were $12.7bn, suggesting that the average family pays $1622 a year once fees on businesses are passed on to consumers, according to research by The Australia Group for consumer advocates Choice and GetUp!
This was more than the average household spent on electricity.
Maurice Blackburn launched the class action with two lead applicants, John Andrews and Angelo Saliba.
Mr Andrews, a former bookshop owner who is now a sales representative for a small publishing company, estimated he had incurred up to $9500 in exception fees. Most of the shop's revenue was generated in November and December and he had fallen behind on his business overdraft and other accounts.
Mr Andrews said his 16-year-old son had urged him to "get one back (from the bank) for the little guy".
Source: ANZ Bank to vigorously fight $50m action | The Australian
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Federal Court of Australia homepage
For reference if and when a judgement comes in
Class action law firm Maurice Blackburn opened the litigation in Federal Court yesterday with a claim for $50m, plus interest, on behalf of 27,199 individuals and businesses, the holders of about 40,000 ANZ accounts.
The claim for honour and dishonour fees, as well as over-limit and late payment charges on credit cards, is confined to the normal six-year limitation period for civil actions.
Bernard Murphy, the law firm's chairman, said the case was "very strong", and would allege the fees were illegal and the bank's action in levying them was unfair under the ASIC, Trade Practices and Fair Trading Acts.
He said Maurice Blackburn and litigation funder IMF Australia, which will pick up 25 per cent of the winnings but is backing the case on a "no-win, no-fee" basis, had so far attracted 150,000 claimants.
A further "significant" spike was expected in the number of participants in the ANZ claim.
"The liability is not capped because people can join the (ANZ) case until it's resolved," Mr Murphy said.
"We can't guarantee success, but we think we have a good case."
ANZ acknowledged yesterday it had been served with a statement of claim, but indicated it would put up a strong fight.
Phil Chronican, CEO for Australia, said ANZ had recognised the fees were unpopular and had introduced a simplified fee structure last December.
"It's a big leap, however, for a fee to go from being unpopular to being unlawful," Mr Chronican said.
"ANZ will be defending this claim vigorously and we plan to hold IMF accountable for the impact of its actions."
Other potential defendants in coming months include Bank of Queensland, Bank SA, Bankwest, Bendigo Bank, Citibank, Commonwealth Bank, HSBC, National Australia Bank, St George, Suncorp and Westpac.
The legal basis of the actions will be similar -- that the fees, which varied but were typically about $50, were not a genuine fee for service or costs incurred but a penalty, and therefore illegal.
Reserve Bank figures show income from penalty fees was running at about $1.2 billion a year at its peak, including $1bn from households.
Total bank fees in 2009 were $12.7bn, suggesting that the average family pays $1622 a year once fees on businesses are passed on to consumers, according to research by The Australia Group for consumer advocates Choice and GetUp!
This was more than the average household spent on electricity.
Maurice Blackburn launched the class action with two lead applicants, John Andrews and Angelo Saliba.
Mr Andrews, a former bookshop owner who is now a sales representative for a small publishing company, estimated he had incurred up to $9500 in exception fees. Most of the shop's revenue was generated in November and December and he had fallen behind on his business overdraft and other accounts.
Mr Andrews said his 16-year-old son had urged him to "get one back (from the bank) for the little guy".
Source: ANZ Bank to vigorously fight $50m action | The Australian
------------------------------- merged -------------------------------
Federal Court of Australia homepage
For reference if and when a judgement comes in
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