December 2, 2013 / 2:25 AM / 5 years ago

ANZ faces Australia's biggest consumer class action

MELBOURNE, Dec 2 (Reuters) - Australia and New Zealand Banking Group is defending Australia’s biggest consumer class action, with customers claiming A$57 million ($52 million) from the country’s third-largest bank for what they say were excessive and unfair fees.

ANZ is the first bank to be targeted, in a three-week trial which began in the Federal Court in Melbourne on Monday.

If successful, class action law firm Maurice Blackburn plans to launch cases against seven other banks seeking a further A$186 million for what they allege were exorbitant fees charged by the banks over a six-year period up to 2010.

The other lenders identified by Maurice Blackburn are Commonwealth Bank of Australia (CBA), National Australia Bank, Westpac Banking Corp, Westpac subsidiaries St George and BankSA, CBA subsidiary Bankwest and Citibank.

Paving the way for the ANZ case in Melbourne, the High Court ruled last year that some bank charges could be considered as penalties instead fees for their services.

The case, representing 38,000 ANZ clients, will test how the Federal Court applies that principle.

Lawyers for the bank’s customers will argue that ANZ’s exception fees, including late payment, over-limit and dishonour fees, were penalties and were unfair and unconscionable.

“The fees are out of all proportion to what it costs the banks,” Andrew Watson, head of Maurice Blackburn’s national class actions practice, told reporters ahead of the trial.

An ANZ spokesman said the bank would continue to vigorously defend the action, but declined to comment further on the case.

“What the case will hinge around is whether the fees are extravagant and unconscionable,” said Katy Barnett, a senior lecturer at the University of Melbourne’s law school.

Research done by the consumer law centre of Victoria state suggested some of the fees were up to 60 times the loss that was caused by the default, she said.

Since 2009 the banks have been slashing fees, with National Australia Bank leading the way by eliminating some fees all together, but lawyers said a number of banks still charge very high over-limit and late fees.

If the action against ANZ is successful, a whole range of commercial contracts in Australia could come under scrutiny, including building contracts, energy supply contracts and mobile phone contracts.

The ANZ case is being funded by Bentham IMF Australia on a no-win, no-fee basis.

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