ANZ first bank to face class action

UPDATED 3:45pm: ANZ says it will vigorously defend a claim of overcharging an estimated $250 million in dishonour or penalty fees over six years.

In the first comments from a major bank about the class action launched in March, ANZ's retail managing director Kerri Thompson says the bank is surprised at the claim.

ANZ is the first defendant defendant in the 'Fair Play on Fees' class actions against major banks, led by Auckland-based lawyer Andrew Hooker and backed by Australian consumer law firm Slater & Gordon and litigation funders Litigation Lending Services.

"It's a sad day when US-style litigation arrives in New Zealand," Mrs Thompson says in a statement from ANZ this afternoon.

"We will be vigorously defending the claim. We're very upfront about our exception fees. They are set out in 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. We're happy to explain to customers how they can avoid exception fees, or help them find the right accounts or products for their circumstances," Mrs Thompson says.

"We are not aware of large numbers of customers being unhappy with the exception fees outlined in our terms and conditions."

The competitive banking sector provides choice if customers don't like what their bank is offering, she says.

"Therefore we feel the action, driven by litigation funders overseas, is unecessary, unfortunate and risks subjecting our customers to a long, arduous and expensive legal process with no guaranteed outcome, and certainly a success fee structured so the lawyers stand to take home significantly more than each customer they are meant to be representing. That's hardly fair."

The action follows a similar suit across the Tasman, where Australia & New Zealand Banking Group is considered to be a test case. The Federal Court of Australia will hear the case in December.

Class action against banks ready to go

UPDATED 1:15pm: The country's biggest bank ANZ has been named as the first bank to be taken to court in a landmark class action against banks.

The announcement has just been made at a press conference for the 'Fair Play on Fees' class action, which is claiming back more than $1 billion in bank default fees

Fair Play on Fees lawyer Andrew Hooker says proceedings, for breaches of the law of contract, will be filed against ANZ Bank New Zealand in Auckland High court next week.

Mr Hooker expects ANZ will defend the proceedings, in which Mr Hooker alleges it has overcharged its customers by $250 million in the last six years.

He hopes to have a first-hearing before a judge within two months.

The case will claim repayment of default fees charged by ANZ and its former subsidiary National Bank over the last six years. These include fees for unarranged overdrafts or rejected payments on deposit accounts, as well as late payment or exceeding a credit limit on credit cards.

The lead plaintiff for the case is Auckland businesswoman Sandra Cooper whose cleaning business, which banked with National Bank before last year's merger with ANZ, is alleged to have been "hit" with about $1500 in default fees.

"I generally only got hit with the fees when I didn't realise that my account would be overdrawn," Ms Cooper says. "This means that I was usually overdrawn by only about $50 for a couple of days at a time. So while the interest on the overdrafts was just a few cents, the $15 fee they charged to administer it really stung."

ANZ and former National Bank customers must register at www.fairplayonfees.co.nz by 11pm on Monday to be included in the case.

There is no upfront costs for customers to join the litigation, covered by Australian funders Litigation Funding Services, with all legal services provided on a no-win, no fee basis.

Further class action will be announced against other major banks in the months ahead.

ANZ is the first to face charges because of the overwhelming number of its customers who had signed up with the campaign.

"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."

About 25,000 people have signed up to the class action since it was launched three months ago, exceeding the minimum threshold of 10,000 the litigation needed to secure its funding.

All  four major Australian-owned banks and state-owned Kiwibank are within Mr Hooker's sights. Smaller banks are not on the radar, due to their size.

Mr Hooker acknowledged a lot of people thought he was dreaming when he announced his plans to bring the class action against banks in July.

"But guess what, we got it off the ground."

Mr Hooker says he can be "extremely confident" of success going by the progress of a similar class action in Australia.

A "non-excessive" default fee is a few cents, he says.

The New Zealand Bankers’ Association chief executive Kirk Hope says he expects the case to be vigorously defended.

“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,” Mr Hope says.

“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.

“The New Zealand banking sector is very competitive and customers have a huge choice.

"Our banks communicate very clearly on fees, and the vast majority of customers don’t incur these kinds of fees."                                                      

9am: A landmark class action against banks, claiming back more than $1 billion in excessive bank default fees, will hit court next week.

'Fair Play on Fees' lawyer Andrew Hooker told NBR ONLINE he has reached the minimum 10,000 registrations required for the class action to go ahead and will file proceedings at Auckland High Court on Tuesday.

More information will be available at a press conference this afternoon, where the first bank to be taken to court in the action will be named.

The lead plaintiffs who will represent the bank’s customers in the class action will also be introduced. They will be represented in court by Queen's counsel Bruce Gray.

Mr Hooker launched class action fair play on fees – understood to be the largest in this country’s history – in March.

He estimates the amount of default fees collected unfairly by the banks over the last six years to be more than $1 billion.

He 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.

The banks have made no public response to the class action since it was launched.

gbond@nbr.co.nz