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Transtasman bank fee judgment may set precedent here

“Extravagant, exorbitant and unconscionable,” is how an Australian federal court describes late payment fees charged by ANZ.

Justice Michelle Gordon, delivering her judgment in the Australian Bank Fees case, Paciocco v ANZ, ruled that the late payment fees the bank charged customers were invalid.

However, Justice Gordon also said that other fees the bank charged, including honour and dishonour fees, over-limit fees on credit cards, were reasonable and were not penal in character.

In 2012, the High Court of Australia decided that a breach of contract was not necessary to show that a fee was a penalty.

Fair Play on Fees lawyers alleged that ANZ bank in Australia charged exorbitant fees of between $20-45 for a service that cost them only a matter or cents, or a few dollars at the most, to administer.

The plaintiffs (Fair Play on Fees) had argued that charging these amounts was effectively a penalty and the banks were illegally charging its customers and should repay the fees.

The lawyers for the ANZ bank had argued that the fees were commensurate to the service provided to its customers in managing their accounts and transactions.

The team behind the case is New Zealand lawyer Andrew Hooker, Australian class action experts Slater & Gordon and litigation funder Litigation Lending Services.  

Mr Hooker, an Auckland-based lawyer specialising in civil litigation, is also leading the Fair Play on Fees case against ANZ/National and Kiwibank here in New Zealand.

“We have been closely monitoring the progress of the Australian bank fees case because, although there are differences between the Australian and New Zealand laws, it will provide our legal team with some important guidance on how best to represent the needs of New Zealanders in the bank fees case in New Zealand,” Mr Hooker says.

“From what we heard in the Federal Court today, Fair Play on Fees thinks the outcome of the case bodes well for its case in New Zealand.”

Following the decision by the Australian Federal Court, ANZ said it was pleased it found in favour of ANZ Australia on four of the five exception fees.

"In relation to credit card late payment fees, we're still considering the judgment and its relevance to New Zealand," ANZ corporate affairs spokesman Pete Barnao said in a statement. 

"In the New Zealand context, the Commerce Commission determined in 2010 that ANZ Bank New Zealand's credit card late payment fees were not unreasonable.

"We’re very upfront about our fees. They are set out in our terms and conditions, which are provided to our customers. Exception fees are avoidable and the vast majority of New Zealanders don’t pay them in any given year.

"As we've said, we will be defending the New Zealand claim vigorously."

Comments and questions

Spare us from judges making commercial decisions. Is the bank not entitled to charge a mildly penal fee to customers who help themselves to unauthorised loans at the banks expenses? Not that one would normally support banks !

In short. No.
NZ law does not allow for punitive damages (except in defamation).
No one, not even a bank may contract outside the law of the land.

She said
“Extravagant, exorbitant and unconscionable,”
You say
"a mildly penal fee"
Why is it I think a defence of the usurer Shylock is coming to mind?

Commercial enterprise must operate under the law. The law directs that banks and insurance companies are defined as 'public interest' entities. These entities operate services for society to rely on in a day to day basis to operate. They are not just businesses.

It is not in the public interest to charge repeat fees every time an account is in OD or not administered precisely on a day to day basis. A quarterly fee of the one-off event cost (say $15) is reasonable if the account is OD over that period. Not each week, or each day it arises - and worse still, when the account is OD due to other bank fees.

In reply to Know from Experience, in which piece of law or statute does it say that banks and insurance companies are defined as public interest entities?

“Extravagant, exorbitant and unconscionable,”

Sounds like legal fees? If bank staff charged the same as Lawyers, the fees would probably be higher. Remember everything takes atleast a 6 minute unit to complete.