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NZ banks now in gun over penalty fees

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 14 NZPA - A lawsuit that could be worth hundreds of millions of dollars is now targeting New Zealand banks over expensive penalty fees, following similar multibillion action across the Tasman.

Two specialist Christchurch law firms, Wakefield Associates and Grant Cameron Associates, are hoping to file a suit later this year, similar to a class action against Australian banks for the billions of dollars they made from what is claimed to be unfair exception fees, The Dominion Post reported today.

ASB, ANZ New Zealand, BNZ and Westpac are all Australian-owned and some charge similar fees, although last year BNZ canned its unpopular fees and Westpac slashed them right back.

Gary Wakefield, principal of Wakefield Associates, told the newspaper banks here had gouged customers in the same way as their Australian parents.

Hundreds of thousands of people had been overcharged, often they were poorer people who struggled with running overdrafts during difficult financial times, he said.

Banks' "exception fees" include honour fees generally for going into overdraft or exceeding overdraft limits, dishonour fees for bounced cheques, late-payment fees on credit cards or loans, and fees for overdrawing on a credit card.

While it was estimated it cost less than $1 to process, customers were typically charged between $20 and $40 a transaction.

A Massey University banking expert estimated the New Zealand banks charged $100 million in penalty fees a year.

Earlier this week it was revealed the Australian class action would be for the repayment of exception fees deducted from bank customer accounts during the past six years by local and foreign banks, IMF said in a statement.

Financial Redress Pty Ltd, a wholly owned subsidiary of IMF, will be responsible for organising each class action.

It estimated the big four banks plus eight others operating in Australia reaped $A5 billion ($NZ6.27 billion) in exception fees during the past six years.

IMF said it was not likely that New Zealanders could join in the Australian lawsuit.

It was already funding cases in New Zealand and it would be a natural follow up to check and make sure the law here was the same, he said.

But Chapman Tripp partner Matt Sumpter said yesterday New Zealand did not have the ability to take class actions like the one in Australia.

Mr Sumpter said while it was possible to band a group of people together to sue a company it would be uneconomical and it was up to the regulator the Commerce Commission to take action if it believed there was a case.

The commission would not comment.

The Reserve Bank of Australia has reported that banks charged about $A1.2 billion in exception fees in 2008/09.

While individual banks contacted by AAP refused to comment, the Australian Bankers Association (ABA) said it had seen reports IMF was going to take this action.

"If IMF proceeds, then ultimately it is for the courts to decide the merits of this claim," the ABA statement said.

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