Customers strike blow against ANZ

6 Sep 2012, 5:07 pm   -   Source: AAP
A court ruling to allow more ANZ fees into a class action against the bank is a win for customers. (AAP)

A court ruling to allow more ANZ fees into a class action against the bank is a win for customers. (AAP)

ANZ customers have struck a blow in court for 170,000 Australian bank customers in a class action to recover what they say are excessive fees

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More than 170,000 Australian bank customers have been cleared to fight for the return of more than $220 million in bank fees after a High Court victory.

About 38,000 ANZ customers struck a blow for customers from another seven banks involved in Australia's largest yet class action.

ANZ chief executive Phillip Chronican for Australia said the case would be vigorously defended, warning the result could spread beyond banks and affect any business that imposed overdrawn fees.

The High Court on Thursday allowed an appeal against a Federal Court ruling last December that limited what ANZ bank charges could be regarded as penalties.

The High Court unanimously rejected the Federal Court's proposition that penalties or punishments only related to actions that breached a contract, such as late-payment fees.

The ANZ class action will now also include dishonour fees of between $25 and $45 imposed on overdrawn accounts.

Such events might only cost the bank a matter of cents or dollars, meaning bank customers should never have had to pay banks fees that were out of proportion, excessive and extravagant, says law firm Maurice Blackburn, which is representing customers.

It is backed by litigation funder IMF (Australia) Ltd.

The broader class action currently involves 170,100 customers and rising, claiming $223 million from the ANZ, BankSA, Bankwest, Citibank, Commonwealth, NAB, St George and Westpac.

The ruling had significant implications for all of the banks involved, said Maurice Blackburn principal of class actions Andrew Watson.

"We'll be going back to the Federal Court with this decision in hand and arguing the rest of the case about these exception fees, looking to establish that they are penalties void and, therefore, refundable to customers," he told reporters in Melbourne.

"However the bank tries to spin this, it is a huge win for customers."

Exception fees are charged for late payments on credit cards and having insufficient money in business and personal transaction accounts.

Mr Chronican said any business including non-banks that had fees for running over excess or using more than a quota of services would be looking over their shoulder.

He acknowledged that the fees were unpopular but said they were a reasonable fee for the service, comparing them to the recovery of bad debts.

The High Court had allowed the appeal but had also acknowledged in its ruling that they might be a reasonable charge, he said.

"We would incur several hundred million dollars a year of bad-debt costs in relation to consumer accounts, and we maintain several hundred people whose job it is to follow up customers," Mr Chronican told reporters.

"When we go back to the Federal Court, we'll be going through how those costs are made up ... there are real costs involved in running a bank where customers can overdraw or run credit up."

Mr Chronican denied ANZ's decision to abolish 27 fees on personal accounts in 2009 and reduce fees on others was an admission that they were gouging customers, saying it was merely making banking simpler.

It will now be up to the Federal Court to determine whether overlimit fees and non-payment fees are penalties, and if they are excessive.

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