Do you feel as if you have been overcharged penalty fees by your bank?
New Zealand banks are facing a lawsuit targeting potentially hundreds of millions of dollars in overcharged penalty fees.
The suit planned by two specialist Christchurch law firms is similar to a A$5 billion class action started this week against the same banks in Australia.
New Zealand's big-four banks – ASB, ANZ New Zealand, Bank of New Zealand and Westpac – are all Australian-owned and charge similar fees.
Gary Wakefield, the principal of one of the firms, Wakefield Associates, said the Kiwi banks had gouged customers in the same way as their parents.
A Massey University banking expert estimated the New Zealand banks charged $100 million in penalty fees a year.
Mr Wakefield said hundreds of thousands of people had been overcharged – "often the poorer people who have struggled with running overdrafts during difficult financial times".
He expected a suit by his firm and partner firm Grant Cameron Associates would be filed this year.
The penalty fees, which banks call "exception fees", typically include: Honour fees, generally for overdrawing on a bank account or exceeding an agreed overdraft limit; dishonour fees, for bounced cheques; late-payment fees on credit cards or loans; and fees for overdrawing on a credit card.
They were typically between $20 and $40 a transaction. It was estimated it cost less than $1 to process such transactions.
The banks on both sides of the Tasman slashed the fees last year to as low as $9, or removed them completely after the Australian Government forced banks there to justify their cost if challenged to do so by customers.
But Mr Wakefield said they had not refunded customers.
At the time the banks said penalty fees were the leading cause of customer complaints.
Yesterday, 1000 people an hour rang the hotlines of the Australian class action funder, IMF Australia, wanting to join the suit.
Chief executive Hugh McLernon said: "It's been bedlam. The interest is huge because of the pent-up anger these fees generate."
Mr Wakefield said a group of wealthy investors would bankroll the court battle in return for a slice of any compensation awarded by the courts.
They were all relatively substantial businessmen who could invest reasonable sumsand "not be swayed too much by the amounts they could potentially lose".
The case would probably take years to settle.
- © Fairfax NZ News