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ANZ customers gain partial victory

Federal court rules ANZ's late payment fees "exhorbitant", but finds other types fees to be valid in a customer class action against the bank.

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Big banks could be forced to refund more than $55 million to their customers, after the Federal Court found ANZ Bank had charged "extravagant, exorbitant and unconscionable" late payment fees on
credit cards.

The ruling also raises doubts about fees that telecommunications and utilities companies charge customers who fail to pay their accounts on time.

In a decision that could affect tens of thousands of customers, the Federal Court on Wednesday found late payment fees charged by the bank were illegal, while four other types of fee were legitimate.

Some 43,500 customers have challenged ANZ in a multimillion-dollar class action alleging certain fees were illegal because they exceeded the cost to the banks of customers overdrawing their accounts or missing repayments.

Justice Michelle Gordon ruled that most of the fees charged by the bank were legitimate, but its late payment fee of up to $35 was ''extravagant, exorbitant and unconscionable.''

The case against ANZ has broader ramifications because is being used as a template for a 185,000-strong class action against major lenders including the Commonwealth Bank, Westpac, NAB and Citi, which proponents say could be worth more than $220 million. It is being billed as the largest class action in Australian history.

The finding paves the way for customers to take action against any company with a late-payment regime, including telecommunications and energy providers.

It also throws out ANZ's six-year statute of limitations, meaning anyone who has ever been charged a late fee by ANZ can potentially now claim those fees back.

''Wherever there are other late payment regimes, they will need to be examined carefully,'' Maurice Blackburn's national head of class actions Andrew Watson said.

Mr Watson told customers to wait for the firm to assess the full implications of the decision before coming forward with new claims.

''There will be a significant amount of interest by those consumers in getting that money, which was unlawfully taken from them, back,'' he said.

''For years and years and years, their banks have been charging them these exorbitant fees.''

''We are now considering the ramifications of the decision.''

Gerard Brody, chief executive of the Consumer Action Law Centre, said companies charging late fees should examine whether they were at risk of breaking the law.

''Telcos especially should examine this judgment and determine whether their fees are similarly excessive, extravagant and unconscionable,'' he said.

Choice chief executive Alan Kirkland said energy companies should also question whether their fees are legal.

''Any business that relies on late payment fees as part of its business model needs to be very worried about this judgment,'' he said.

Both Telstra and Optus charge a flat late-payment fee of $15 on any bill worth $70. AGL and Origin Energy charge a late-payment fee of $14 and $12 respectively.

Telstra said on Wednesday that its late payment fee was ''cost recovery for Telstra as we incur large administration costs when our customers do not pay on time.''

''For example we send reminder notices, text messages and our call centre staff telephone our customers.''