In what is following on from a landmark case in Australia, customers have decided to team up and stand against the banks over what they argue are extraordinarily high late payment fees. Billy Bambrough examines the case and what has lead up to it
Banks in Australia are worried. In a country that has what is arguably the world’s most modern banking system hundreds of thousands of Australians are about to share in the nation’s biggest class action against the country’s biggest banks over what people feel are unfair late payment fees.
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Legal firm Maurice Blackburn has launched the action in the NSW supreme court, to cover all customers of Westpac, St George, Citibank, BankSA and ANZ, who have ever been charged a credit card late payment fee.
Precedent for the mammoth case was laid by earlier in the year by the same law firm, Maurice Blackburn, taking action against ANZ. A High Court judge handed down judgment finding that late payment fees on credit cards are penalties and should be repaid, with no retrospective time limitation on claims.
Andrew Watson, who heads Maurice Blackburn’s class action practice, says the ground work was laid by the earlier class action where a court found fees were a penalty and excessive and that customers were entitled to the difference between what they were charged and the true cost to the bank.
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By GlobalDataThe previous action, which class action members had to sign up to, covered 185,000 customers of the various banks though this case is expected to be far larger.
Watson says: "This action will be many times bigger because it will cover anyone who, at any stage, has been charged a late payment fee on a credit card."
The effect on the banks could potentially be greater than the recent UK banking scandal which saw the big high street banks all have to set aside hundreds of millions to refund customers which had been miss-sold payment protection insurance. According to Watson no one knows the size of the potential compensation payout should the action be successful but said it would be substantial.
The law firm estimates the case against ANZ to be $243m and as wronged customers had to actively signup to receive a payout this case will be substantially more.
"It’s too early to tell how it will stack up in terms of any compensation paid, but clearly in terms of the numbers of people involved, this is the largest class action in Australian history," he said.
"You just have to comprehend we’re effectively talking about any bank customer of these major banks, and in the future it will be others as well, who has ever paid a late-payment fee on a credit card."
Watson said the class action included those who were not part of the successful claim earlier this year.
"The February action was for those who signed up. This is for everybody who has not signed up. We will be taking action against other banks as we identify appropriate lead applicants who can lead up those actions."
He said that even though February’s decision to award compensation for late payment fees was subject to an appeal, due to be heard next week, it would not affect the decision to launch the current legal claim.
"This is not jumping the gun. This is an action which we have taken as part of a considered approach to ensuring that the rights of all customers of the banks are best preserved in the event that the appeal is successful," he said.
Consumer Action Law Centre CEO Gerard Brody said the case built on the federal court finding that late fees charged by ANZ were unlawful, arguing a similar claim against other banks.
