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No banks are off the hook in the class action to claim back more than $1 billion in excessive bank default fees, the New Zealand lawyer leading the legal action says.
North Shore lawyer Andrew Hooker announced the class action 'fair play on fees' – understood to be the largest in this country's history – alongside two Australian lawyers today.
Mr Hooker says the country's four major Australian-owned banks – Westpac, ANZ, ASB and BNZ – are all "up to their armpits" in the alleged over-charging.
Kiwibank is not exempt. Mr Hooker says the state-owned bank has been steadily charging the fees for years, "sometimes more than the Australian banks".
Mr Hooker estimates the amount of default fees collected unfairly by the banks over the last six years to be more than $1 billion. About 15% of that would have been incurred by businesses, he says.
These fees occur when customers overdraw their account, pay their credit card too late or bounce a cheque.
Mr Hooker is calling for New Zealanders to sign up to participate in class actions to claim this money back.
Within an hour of the announcement, the website www.fairplayonfees.co.nz had already received more than 300 registrations and 110 sign-ups.
The class action is being backed by Australia's largest consumer law firm, Slater & Gordon, which will lend its expertise as legal advisers.
Claimants have no up-front costs. The entire litigation process is funded by litigation funding firm Litigation Lending Services NZ, and all legal fees are rendered on a no-win, no-fee basis.
Mr Hooker says he is confident of getting the minimum 10,000 registrations required for the class action to go ahead.
Contract law principle
Mr Hooker, whose 20-year career in civil litigation includes representing customers against their insurance companies, says the case will be based on a principle of contract law, which places a limit on the amount a customer can be charged if they default on an obligation.
He says customers are being charged an average of $15 every time they overdraw their accounts, pay their credit card late or bounce a cheque.
Standard, monthly account-keeping fees, interest charges and ATM fees are not included in the action.
The onus will be on the banks to show what it actually cost them when a customer is in default to meet a payment, Mr Hooker says.
"We say the actual cost to the bank is a couple of cents when those instances take place, but ultimately that will be for the court to decide."
Banks have ignored the principal of contract law for years and customers have been helpless to fight them, Mr Hooker says.
"Why would you sue a bank for $15 or even $20? That is why we have a class action."
He says New Zealanders are not used to this concept of class action.
"I think the institutions in New Zealand are used to keeping their heads down and hoping the punters go away.
"A class action is the only way banks can be held accountable and prevented from charging excessive fees now and into the future.
Mr Hooker estimates 20% of New Zealanders have regularly incurred these excessive bank fees.
No action has yet been filed in Auckland High Court.
Across the Tasman, the Australian parent companies of New Zealand's major banks are also being sued over the same allegations.