Maurice Blackburn has appeared in Federal Court today armed with the claims of around 34,000 ANZ Bank customers disputing their bank exception fees.                                                          .

In what the firm describes as Australia’s largest consumer class action, Maurice Blackburn’s clients instituted proceedings against ANZ in September 2010. The case is John Andrews & Ors v ANZ Banking Group Limited.

The fees were charged by ANZ to customers who had paid their credit card bill late or had overdrawn their personal bank account. In such cases, ANZ charged customers some $30 or more in what are called ‘exception fees’.

The case was heard today in relation to the major legal contentions.

ANZ may, if the case is successful, be forced to pay back potentially millions in consumer fees.

The key issue is whether the exception fees charged by ANZ were reasonable in relation to the costs incurred by the Bank attributable to late payment or an overdraw event.

Maurice Blackburn claims that the cost to ANZ, whenever these events occurred, was negligible:

“We will argue that ANZ has to show that an exception fee is a reasonable estimate of the loss caused to ANZ when a customer does not pay on time, or overdraws an account, and that if it cannot show that, its customers are entitled to a refund. ANZ says these rules do not apply to it, because the charge is just a fee for a service offered to its customers.”

Australian contract law generally prohibits penalty damages. If Maurice Blackburn can prove that the fees amounted to a windfall profit to the Bank and not a “fee for service”, there is a good chance that the Court may consider the fees to be ‘penalty damages’.

If so, ANZ would likely be ordered to repay the fees it collected from the 34,000 claimants.

Other banks seem to have caught on. The National Australia Bank abolished overdrawn or ‘reference’ fees in 2010. Many more banks, too, have substantially reduced fees for late credit card balances.

The outcome of the ANZ case may well set an important precedent for the consumer banking industry in Australia.

- SECTION EDITOR