ANZ first bank to face fee lawsuit
ANZ Bank has vowed to vigorously defend itself from a class action lawsuit over unfair penalty fees.
The bank was named as the first of several major lenders to be sued, with papers due to be filed at the High Court in Auckland next Tuesday.
"ANZ has overcharged hundreds of millions of dollars over the past six years," Fair Play On Fees founder and lawyer Andrew Hooker told a media conference today.
"Their customers have come to us in droves, with over 11,000 signing up in the past three months. We expect thousands more to join them over the next week."
The Fair Play on Fees campaign, launched in March, alleges that the "exception" fees charged by banks have reaped them at least $1 billion over the last six years.
ANZ managing director retail Kerri Thompson acknowledged the bank's large size made it a target but said it was still a surprise.
"We do believe that we have a very strong case, and we'll vigorously defend this," she said.
Thompson said the bank had reviewed its exception fees a number of times, including giving a breakdown of costs to the Commerce Commission.
"We absolutely believe that we've got good quality data that backs up the justification for these fees."
Thompson said Hooker's claim that the real cost was likely to be a few cents was "ludicrous".
She also noted that the vast majority of customers avoided paying the fees.
More than 24,000 people have signed up to the class action so far, giving the campaign the critical mass required to proceed further.
Hooker said the case would claim repayment of default fees charged by ANZ and its former subsidiary National Bank over the past six years, including fees for unarranged overdrafts, rejected payments on deposit accounts, and late payment on credit cards or exceeding a credit limits.
He is working with Australian legal heavyweight Slater & Gordon and litigation funder Litigation Lending Services (NZ) and also has the other big Australian-owned banks - Westpac, ASB and BNZ - in his sights, as well as the state-owned Kiwibank.
Auckland resident Sandra Cooper has been named today as one of the lead plaintiffs for the case, acting as a figurehead to represent her fellow disgruntled customers.
Over the past six years she has been hit with about $1500 in default fees, making her a typical claimant.
Cooper said she hadn't realised how serious the issue was until the campaign launched, and she put herself forward because it was unacceptable.
"There are lots of people living on the breadline in New Zealand that are being ripped off by the banks," she said.
Cooper has complete indemnity from the estimated $3.5 million costs of the lawsuit, with all the risk falling upon the litigation funders.
ANZ is the country's largest lender, and claims to have a relationship with one in every two New Zealanders.
The first lawsuit will test the waters before the others proceed, and the campaigners said it would set a strong precedent for other claims.
Fair Play on Fees estimated that ANZ and the now-defunct National Bank charged about $250m of unfair fees over the past six years.
ANZ or National customers have until 11pm next Monday to be included in the case.
Hooker said while there might there might be some scope to sign up people after the documents were filed, the bank's lawyers would probably try and prevent it.
If the case is successful, Litigation Lending Services will take 25 per cent of the proceeds.
The campaign runs in parallel with a similar class action in Australia, where 11 of 12 lawsuits are on hold until the outcome of a test case, also against ANZ Bank.
The bank lost a battle in the Australian High Court in September last year, and will now have to convince the Federal Court that its fees were a genuine reflection of costs.
According to Fair Play on Fees, the legal principles involved in Australia are almost identical to those in New Zealand.
While overdrawn accounts, bouncing cheques, and late credit card payments usually incur fees of $10-$20, Hooker has claimed the real cost to banks is just a few cents.
That allegedly violates a principle of contract law, which says customers can only be charged a default fee that reflects the reasonable cost to the lender.
Hooker said previously that banks had simply ignored the principle for years and customers had been helpless to fight them.
The litigation is expected to take several years to resolve, but Hooker hoped the first court appearance would be within the next couple of months.
The New Zealand Bankers' Association (NZBA) said it expected the case to be vigorously defended by the ANZ.
"Fees of this nature are usually avoidable. Customers concerned about their fees should talk to their bank to make sure they have the accounts and products that suit their needs," said NZBA chief executive Kirk Hope said.
"If people are looking for an easier way to resolve the issue they should talk to their bank. Looking at the Australian experience, the action has gone on for a very long time and remains unresolved."