11 Mar 2013

Class action on bank fees mooted

11:05 pm on 11 March 2013

Up to one million New Zealanders could be eligible to join in a proposed class action to claim back excessive bank default fees.

Three firms are planning a class action to claim back excessive bank fees, if they get sufficient interest from people affected.

They say banks have unfairly charged about $1 billion in fees during the past six years.

The legal action is being led by Auckland lawyer Andrew Hooker, Australian class action experts Slater & Gordon and litigation funder Litigation Lending Services.

They say the litigation would be the largest class action in New Zealand's history if it proceeds.

Litigation Lending Services' spokesperson Michelle Silvers says a minimum of 10,000 people are needed to file the claim but they expect up to 50,000 people to join in.

Andrew Hooker says customers are charged an average of $15 in default fees every time they overdraw their accounts, pay their credit card late or bounce a cheque, when the cost to the bank is actually just a few cents.

He says the case will be based on a principle of contract law that places a limit on the amount a customer can be charged if they default on an obligation.

Mr Hooker says the move follows a similar class action case taken in Australia. That case is now back before the Federal Court of Australia.

The Bankers Association says talk of legal action relating to bank fees fails to take into account differences between the New Zealand and Australian banking sectors.

No reason for concern - bankers' body

The organisation representing most New Zealand banks says customers have no reason to be concerned about bank default fees.

Bankers Association chief executive Kirk Hope told Radio New Zealand's Checkpointprogramme there are already measures to prevent customers paying penalties.

Mr Hope says talk of legal action fails to take into account differences between the New Zealand and Australian banking sectors.

He says the Commerce Commission already oversees most of the fees in question.

"Banks have communicated very clearly on fees and the fees being singled out are avoidable, Our industry's made it easy for customers to switch banks if they feel the fees they are paying are too high."