ANZ dishonour fees 'excessive'

THE first stage of Australia's biggest class action has begun in the Federal Court with lawyers representing 34,000 aggrieved ANZ customers arguing that certain fees charged by the bank amounted to an improper imposition of a penalty.
There is a long way to go before any of those customers learn if they can retrieve compensation from the bank and that is because, with so much at stake, each stage of the class action is likely to run to appeal.
This week the court is considering if fees levied by the bank were, as the ANZ customers argue, penalties - and not, as the bank contends, a service charge for applying its discretion about extending credit or honouring overdrawn accounts.


Lawyers for the ANZ customers told the court yesterday the bank appeared to have developed ''a nice little earner'' in levying fees against overdrawn accounts.
Counsel for the ANZ customers, Justin Gleeson, SC, traversed more than 700 years of legal history as he argued that the law on penalties and contracts, at least as far as Australia is concerned, is not entirely settled.
Over five hours, the court heard about the operation of penal bonds in the 14th century, a dispute between two English fishmongers in 1670, developments after the passing of the 1875 Judicature Act, and a line or two from Shakespeare's The Merchant of Venice.
It also heard about 17 specific instances between 2004 and 2010 when ANZ charged ''honour'' or ''dishonour'' fees for overdrawing cheques or credit accounts, for late payments on credit cards and for exceeding specified limits on credit cards. The 17 instances are being used as quasi test cases.
Outside the court, lawyer Andrew Watson of class action specialists Maurice Blackburn Lawyers, said the history of the law in this area showed that ''a penalty provision will not be enforced by the courts''.


"There should be an expanded view in reference to the history of the law that's developed since the 14th century.


And what the law says, and has said for hundreds and hundreds of years, is that a penalty provision will not be enforced by the courts."


The litigants acknowledge the banks' right to recover a "genuine pre-estimate" of its damages from a customer who breaches the terms of their account.


"The fees in this case are in no way a genuine pre-estimate of damage," Mr Watson said.


The main kind of fees being dealt with are dishonour fees on accounts and over-limit and late-payment fees on credit cards.


In the case of ANZ, the fee is generally $35.


"Those types of fees are extravagant or exorbitant and customers should be recompensed for the amounts they've paid," Mr Watson said.


Lead counsel for the litigants, Jason Gleeson, told the court if ANZ didn't want people to exceed their limits, they shouldn't allow it to happen.


"A bank can reject a customer's instructions and hold them to their current credit limit," he said.


Instead, banks allow customer to access an overdraft, and then penalise them and reverse the transaction.


"Instead of mitigating its loss, (the bank) collects a fee," he said.


ANZ argues the fees in question are not penalties for a breach of contract, but are fees associated with services.