Turning out to be the largest in the legal history of Australia, legal firm – Maurice Blackburn Lawyers – has filed an open class action today against Australia & New Zealand Banking Group Limited (‘ANZ’) and several other banks for unfairly charging late fees to customers on credit cards. Westpac Banking Corp. and its units – St. George Bank Ltd. and BankSA – and Citigroup Inc. (C) stand as the other alleged firms in this suit filed in the New South Wales Supreme Court.
Though the open class suit seeks reimbursement for the customers, there is no specific time frame of it getting recovered. The legal firm is also mulling over the possibility of broadening the class action to cover nine financial institutions in total, including Commonwealth Bank of Australia and its unit Bankwest, National Australia Bank Ltd, and American Express Co. (AXP).
The Story So Far
In Sep 2010, Maurice Blackburn filed a case in the Federal Court of Australia against the ANZ Group. This filing was the first among several bank fee class actions for reimbursement of fees the banks charged their customers since 2004. Such fees consisted of honour and dishonour fees on bank accounts and fees related to over limit and late payment on credit cards.
The firm took subsequent action in the later years against Citibank, Commonwealth Bank and its unit Bankwest, National Australia Bank Ltd and Westpac Banking Corp. and its units – St. George Bank Ltd. and BankSA.
The cases led to the online signing up of more than 180,000 customers who were charged undue fees by these banks. These customers claimed money with interest, which is now estimated to be over A$240 million.
In 2012, Australia’s prime court – the High Court – ruled in favor of ANZ, stating that all the bank fees in concern could be regarded as penalties levied by the bank. However, in Feb 2014, Justice Michelle Gordon of the Federal Court mentioned in her judgment that late payment fees were illegal charges and hence customers stand eligible for recouping the money.
Notably, it was revealed from her judgment that ANZ’s credit card late fees penalty was of up to $35, which represents an excessive amount compared to the actual cost to the bank of just 50 cents. However, she dismissed other claims relating to bank fees, stating such fees were not unlawful.
The New Class Action
This partial win in Feb 2014 led to the new open class action suit. While the February suit pertained only to the registered customers, the new suit includes all customers who have been charged late fees by the targeted banks, even those who have not signed up. An appeal from the Feb 2014 court ruling is scheduled on Aug 18, 2014 and Aug 19, 2014.
The open class action will be funded by Australia’s major litigation financer Bentham IMF Limited, which also funded the related previous class actions.
While the total claim amount of this huge legal suit is yet to be finalized, thousands of customers of the targeted banks will benefit if the ruling goes in favor of the legal firm.
Both Citigroup and American Express carry a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance sector include Piper Jaffray Companies (PJC) and Cohen & Steers Inc. (CNS). Both the stocks sport a Zacks Rank #1 (Strong Buy).
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