Hundreds of thousands of bank customers stand to benefit from a sweeping new class action over credit card late fees worth hundreds of millions of dollars, to be lodged by law firm Maurice Blackburn today.
In what is shaping as the broadest class action in Australian legal history, Maurice Blackburn will today file NSW Supreme Court lawsuits against ANZ, Citibank and Westpac.
Lawsuits against NAB, American Express and the Commonwealth Bank are expected to follow.
Every customer of the target institutions who has been stung by excessive late fees will automatically be included in the class action, making it difficult to estimate the size of the potential claim.
Known as an ‘‘open class’’, this is the opposite of previous bank class actions, which ran as ‘‘closed classes’’ and required victims to register to join. Despite the need to register, the closed class cases attracted more than 180,000 customers who claimed a total of $223 million.
There is also no time limit on how far back in time the fees might be clawed back, although the ANZ will next week ask a court to impose one.
The new class action builds on Maurice Blackburn’s partial victory in a Federal Court case against ANZ that has been running since 2010.
Maurice Blackburn has also filed similar class actions against Citibank, CBA, NAB and Westpac.
In February, Justice Michelle Gordon found that ANZ’s credit card late fees of up to $35 were a penalty and were ‘‘extravagant and unconscionable’’ because they were excessive compared to the cost to the bank of as little as 50¢.
She waived the usual six-year time limit on legal action, saying there was no restriction on how far back class members could claim the late fees because they did not know the fees were unlawful until the lawsuit was lodged in 2010.
However, she threw out Maurice Blackburn’s claims that other fees, including dishonour fees and overlimit fees, were excessive.
The banks have reaped about $6 billion from the various so-called ‘‘exception fees’’, with late fees on credit cards making up about a quarter of the haul.
Maurice Blackburn’s new lawsuits are to be bankrolled by litigation funder Bentham IMF, which plans to take 22.5% of any winnings, subject to the approval of the court.
A source close to the lawsuit said that without litigation funding, which is currently under scrutiny by the Productivity Commission and out of favour with Attorney General George Brandis, Maurice Blackburn would have been unable to run the bank fees cases.
This is because, although there are thousands of victims, each has suffered losses totalling at most a few thousand dollars – far too little to justify mounting an expensive individual court case against some of Australia’s biggest companies.
Adding to the legal bills, so far the bank fees action has travelled all the way up to Australia’s top court, the High Court, which in 2012 ruled it was possible for bank fees to be penalties.
Maurice Blackburn’s move comes ahead of an appeal, to be heard on Monday by the Full Court of the Federal Court, in which both it and ANZ are challenging the original credit card late fee ruling.
If Maurice Blackburn wins the appeal and the court strikes down additional bank fees, the law firm is likely to lodge more class action lawsuits, swelling the potential size of any payout even further.
However, if ANZ wins, today’s lawsuit may become effectively a dead letter.
Alternatively, the Full Court may decide to overturn Justice Gordon’s decision to waive the statutory six-year limit, reducing the amount victims can claim.
In addition to Westpac, today’s lawsuit is expected to take in subsidiaries St George and BankSA, while the foreshadowed action against CBA is expected to include its subsidiary, BankWest, bringing the total number of institutions targeted to nine.Author: Ben Butler, Adele FergusonSource: Sydney Morning Herald
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