Big four banks face class action

Major Australian banks face a class action lawsuit over the large fees they charge for relatively minor infractions such as going a few dollars overdrawn without authorisation, lawyers said Wednesday.

Lawyers said the value of the claims could amount to 4.5 billion US dollars.

Australia's four major banks -- Commonwealth Bank, ANZ, National Australia Bank and Westpac -- are named among the proposed defendants. Major banks have recently removed or reduced many of these charges.

Legal firm Maurice Blackburn said 12 banks were the subject of potential cases focussed on fees charged for paying cheques that bounce, going over credit limits or making late payments on credit cards.

"It's a very substantial action," Maurice Blackburn chairman Bernard Murphy told ABC Radio, explaining that in 2008 alone "exception fees" totalled 1.2 billion dollars (1.07 billion US), according to Australia's central bank.

"So there is an estimated claim value in the order of five billion (Australian) dollars."

Murphy said millions of Australians were out of pocket as a result of banks charging between 25 and 60 Australian dollars for infractions that were often of negligible value.

"It is simply unfair that a bank could charge, say 40 dollars, for going 10 dollars over the limit on credit card when the actual cost to the bank is under a dollar," he said. "It's time the banks reimbursed their customers."

The proposed lawsuits will allege the banks' high exception fees penalise customers for breaching a term of the contract, such as paying a bill late, when the banks should only be allowed to recover their costs.

Because the amounts were so large compared to the cost, they are arguably illegal and customers are entitled to a refund, Maurice Blackburn said. The class action lawsuits relate to fees charged over the past six years.

The class action will be funded on a "no-win, no fee" basis by litigation founder IMF Australia Ltd and its subsidiary Financial Redress.