Aus banks face firing squad over fees
(13 May 2010 – Australia) Australia’s banks look like they have a battle on their hands, as they come under attack for an estimated A$5 billion worth of excessive penalty and late fees charged over the last six years to consumers.
The largest class action in corporate history is being led by litigation funder IMP Australia, indicating that they will pay for at least 10 class actions against the Australian banks; including the big four and seven other smaller institutions.
The further scrutiny is especially unwanted by the larger banks that have been in the spot light since the global financial crisis for exploiting their heightened market dominance by raising charges to unreasonable levels.
Besides the big four, the other seven Australian banks that are speculated to be targeted for in the class action include the Bank of Queensland, Bendigo and Adelaide Bank, Suncorp, HSBC and Citibank.
Last year the Reserve Bank of Australia revealed for the first time that Australia’s banks had charged almost A$1.2 billion in ‘exception fees’ in 2008.
Exception fees are generally made up of honour and dishonour fees.
Honour fees, usually being a penalty fee of A$40, is applied when a customer overdraws on a bank account or exceeds an agreed overdraft limit and the bank pays it out. Dishonour fees are incurred for cheques that bounce; late payment fees for credit cards or loan accounts; and fees for overdrawing on a credit card. These fees typically range between A$25 and A$60 on each transaction.
On top of the exception fee, banks normally charge interest despite the fact that the bank normally has security over the family home to cover the overdrawn amount and they also boast the technology to stop the overdraw from occurring in the first place.
Claims against the banks can go back six years and will involve repayment of those fees plus interest from the date of the deduction. IMF subsidiary Financial Redress will organise each class action.
Personal claims are expected to average A$2000, while business claims are likely to average A$5000.
The further scrutiny is especially unwanted by the larger banks that have been in the spot light since the global financial crisis for exploiting their heightened market dominance by raising charges to unreasonable levels.
Besides the big four, the other seven Australian banks that are speculated to be targeted for in the class action include the Bank of Queensland, Bendigo and Adelaide Bank, Suncorp, HSBC and Citibank.
Last year the Reserve Bank of Australia revealed for the first time that Australia’s banks had charged almost A$1.2 billion in ‘exception fees’ in 2008.
Exception fees are generally made up of honour and dishonour fees.
Honour fees, usually being a penalty fee of A$40, is applied when a customer overdraws on a bank account or exceeds an agreed overdraft limit and the bank pays it out. Dishonour fees are incurred for cheques that bounce; late payment fees for credit cards or loan accounts; and fees for overdrawing on a credit card. These fees typically range between A$25 and A$60 on each transaction.
On top of the exception fee, banks normally charge interest despite the fact that the bank normally has security over the family home to cover the overdrawn amount and they also boast the technology to stop the overdraw from occurring in the first place.
Claims against the banks can go back six years and will involve repayment of those fees plus interest from the date of the deduction. IMF subsidiary Financial Redress will organise each class action.
Personal claims are expected to average A$2000, while business claims are likely to average A$5000.
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