Partial win on bank penalty fees

Australian Federal court rules ANZ's late payment bank fees are illegal.
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01.Bank fees on notice


CHOICE cautiously applauds today’s Federal Court decision calling for ANZ to reimburse about 43,000 customers for penalty bank fees as high as $45. 

It’s a first step in what we hope will be a consumer-focused resolution of cases outstanding against BankSA, Bankwest, Citibank, Commonwealth, NAB, St George and Westpac. Over-fined customers are seeking to recover about $220m in total. 

Prior to today’s decision in Melbourne, the High Court had ruled that high “exception” fees for overdrawn accounts would be recoverable if they were shown to be a penalty rather than a legitimate fee for handling the error. Today’s ruling is only a partial victory for consumers, however, since the court ruled that only late payment fees were illegal. Other fees, such as direct debit dishonours, appear not to be recoverable in the ANZ case. 

We published our first review of bank penalty fees in 2005, and have been campaigning since to bring such fees in line with the real costs to the banks – something that CHOICE and law firm Maurice Blackburn argue is a small fraction of the actual amounts charged. For banks, excessive penalty fees have meant a windfall of $1 billion per year.

Among other changes, CHOICE has called for: 

  • An end to inward cheque dishonour fees – it’s hardly your fault if someone writes you a cheque when there isn’t enough money in their account to cover it. 
  • A choice between declining transactions at no cost, or charging a reasonable fee for processing the transaction that is no more than the actual cost to the bank. 

We believe it’s unfair to charge the customer for direct debit dishonours, as the bank doesn’t provide any service when an automatic payment is declined. 

While bank fees have been on the decline since the class action was launched in 2010 they are still excessive in some cases. 

“It’s not the role of business to punish its customers. Charging excessive fees is a draconian measure that disproportionally impacts some of the most vulnerable consumers in our community,” says CHOICE Chief Executive, Alan Kirkland. 

Today's Federal Court decision "should make it very clear to all banks but particularly the big four that the days of charging excessive fees to bolster profits are over.”



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