Commonwealth Bank of Australia, Westpac Among Banks Sued Over Fee Payments

Commonwealth Bank of Australia (CBA) and Westpac Banking Corp. were sued by customers seeking to recoup allegedly illegal fees, after a judge allowed part of a lawsuit against Australia & New Zealand Banking Group Ltd. (ANZ) to proceed.

Maurice Blackburn Lawyers will also file claims against National Australia Bank Ltd. (NAB) and Citigroup Inc.’s Citibank, said Andrew Watson, head of class actions at the firm, which is litigating the class-action suit. The claims against the five banks total A$197 million ($196 million), he said at a briefing in Melbourne today.

Australian banks have charged as much as A$5 billion in fees that clients are seeking to recoup, said James Middleweek, managing director at the Financial Redress Pty unit of IMF (Australia) Ltd. (IMF), a litigation funder. Customers holding more than 247,000 accounts have registered to sue, according to the website of Financial Redress.

The lawsuits show “how aggrieved ordinary customers are with their banks,” Middleweek said.

More than 150,000 customers are represented in the four new lawsuits, Watson said.

Nick Buchan, a Westpac spokesman, didn’t immediately respond to an e-mailed request for comment. Steve Batten, a spokesman for Commonwealth Bank, didn’t respond to phone and e- mail requests.

Citigroup, NAB

National Bank of Australia will defend against the lawsuit, spokeswoman Sharna Rhys-Jones said in an e-mailed statement.

“NAB has led the industry in abolishing a range of fees,” she said. “We did this because it was the right thing to do by our customers.”

Rhys-Jones said the bank hasn’t received the claim yet.

“Citigroup will defend the matter, but we are waiting on the detail as we have not been served the documents yet,” the bank said in a statement provided by Sydney-based spokeswoman Kristen Kaus.

Westpac Chief Executive Officer Gail Kelly has said fees charged by banks are “completely inappropriate,” according to Middleweek. “It would be good if at least one of these banks would show a bit of leadership on this issue,” he said.

Federal Court Justice Michelle Gordon ruled Dec. 5 that the lawsuit against ANZ can proceed because it is related to charges for late credit-card payments. At issue in the decision was whether the charges could be characterized as penalties, in which case they could be challenged in court as excessive and therefore illegal.

Honor Fees

The credit-card late-payment fees make up about 40 percent of the A$50 million ANZ customers are seeking to recoup, according to Watson.

Gordon dismissed complaints about charges for insufficient funds in accounts or overdrawn bank accounts, ruling that those didn’t amount to penalties.

So-called honor fees of A$29.50 charged when a bank clears a check even when an account has insufficient funds, dishonor fees of A$45 imposed when a check bounces and credit-card fees charged when clients exceed approved limits, can’t be characterized as penalties, the judge ruled. A A$35 credit-card late-payment fee can be considered a penalty, she said.

Maurice Blackburn plans to appeal Gordon’s ruling on charges that she said can’t be characterized as penalties, Watson said.

The case is: John Andrews v. ANZ Banking Group Ltd. VID811/2010. Federal Court of Australia (Melbourne).

To contact the reporters on this story: Brett Foley in London at bfoley8@bloomberg.net; Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net; Douglas Wong at dwong19@bloomberg.net

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