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16 August 2012

Bank fees targeted in Australia's biggest class action

A class action suit aiming to reclaim more than AU$220m (£147m) in bank fees kicked off in Australia's High Court this week.

Canberra: home to Australia's High Court

A team at specialist claimant national law firm Maurice Blackburn is representing 170,000 customers from eight banks, including ANZ. The claimants maintain they paid unfair penalties for late credit card payments and having insufficient funds.

Andrew White, class actions principal at Maurice Blackburn, told Australian newspaper the New Lawyer, that the action was ‘a hard-fought contest, involving complex arguments dealing with principles of English law stretching as far back as the 12th century’.

Unreasonably expensive

He said the bank charges had been unreasonably expensive, and that ‘the law should focus on the reality of the fees charged rather than allowing the banks to hide behind complex wording to avoid the doctrine of penalties’.
The hearing is likely to revolve around whether the fees are considered penalties or fees charged for a service, with Maurice Blackburn arguing that they are penalties, which are unfair on customers.
Sinclair Davidson, an economics professor at Melbourne’s RMIT University, defended the banks on the ground that the charges are clearly and fairly outlined in contracts agreed by all customers. He told ABC News that ‘I really don’t think that it’s that much of a problem that banks charge fees for breaching contracts.’

Third-party funding

According to the Sydney Morning Herald, the Australian Bankers’ Association has insisted that while unpopular, the fees are ‘defensible’.
The Australian branch of third-party litigation funding business IMF is backing the action, with its investment manager, James Middleweek, commenting that ‘redress is long overdue’ for the payments.

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