LAWYERS representing 170,000 people in Australia's biggest class action say the nation's major banks should be made to pay back more than $220 million collected through "unfair" penalty fees.
Maurice Blackburn's attempt to recoup the money began in the High Court today.
The High Court hearing marks the first of eight class actions, which are being funded by the IMF Australia, with 38,000 ANZ customers seeking to recoup $50 million.
Maurice Blackburn class actions principal Mark Watson said he was confident the action would succeed.
"Today's case is about justice for 170,000 banking customers who are part of eight class actions against the major banks," Mr Watson said outside the High Court.
"We're going to be arguing that a whole range of exception fees constitute unfair penalties.
"What it costs the banks to process honour fees, dishonour fees, over-limit fees is a fraction of what they charge customers, therefore a penalty under the law, illegal, and something that should be paid back.
"Maurice Blackburn will seek an expansion of the doctrine of penalties, a task he described as a "significant challenge".
Essentially, the court will be asked to determine whether the bank charges are fees or penalties for a service.
Mr Watson said the legal argument would be "complex" and would deal with principles of English law stretching as far back as the 12th century.
"It will be a bit more refined in there today (than the 12th century), but we'll be relying on those cases that the court should focus on the reality of those transactions, not just the wording of the contracts," he said.
"We have a strong case to make at the High Court today and we intend to continue taking it up to the banks to help hundreds of thousands of everyday Australians get back money we believe they shouldn't have had to pay."
Mr Watson said the High Court action represented an important moment in this case.
If the action is successful the implications will extend beyond the banking sector, he said.
"This is a very significant case, not just for the 170,000 banking customers who are part of the various class actions, but also for banking customers' right across the country and for other consumers," he said.
"The sorts of considerations that we've got here, in terms of an expanded doctrine of penalties, will have ramifications far beyond just today's case.
"We say the law should focus on the reality of the fees charged rather than allowing the banks to hide behind complex wording to avoid the doctrine of penalties."
IMF investment manager James Middleweek said regardless of the High Court's decision Australian bank customers knew they were being "ripped off".
"At least one bank chief executive has already admitted that these charges were completely inappropriate. Yet two years after we started, not one bank has done anything to compensate customers. Redress is long overdue," he said.
Maurice Blackburn said banks charged Australian households $652 million in exception fees in the financial year to 2010, which was down from $1.3 billion in the previous year.
Other banks involved in the class action are:
- BankSA (1500 customers claiming $2 million);
- Bankwest (6600 customers claiming $10 million);
- Citibank (10,000 customers claiming $15 million);
- Commonwealth (45,000 customers claiming $56 million);
- NAB (30,000 customers claiming $38 million);
- St George (9000 customers claiming $14 million), and
- Westpac (30,000 customers claiming $38 million).
People can still join the IMF's class action by registering at financialredress.com.au.
IMF is operating a no-win, no-fee basis.
- Sept 22, 2010: First bank fees class action filed against ANZ.
- Dec 5, 2011: Justice Gordon in the Federal Court finds that late payment fees are capable of being penalties, but finds for ANZ on other fees.
- Dec 16, 2011: Class actions filed against Commonwealth, Westpac, NAB and Citibank.
- Dec 22, 2011: Maurice Blackburn appeals adverse findings in Justice Gordon's December judgment.
- Feb 1, 2012: Class action filed against Westpac subsidiaries St George and BankSA.
- Apr 18, 2012: Class action filed against Bankwest.
- Aug 14, 2012: High Court hears appeal from Justice Gordon's
- Dec 5, 2012: Judgment.