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NZ banks respond to possibility of exception fees lawsuit

Fuseworks Media
Fuseworks Media

Wellington, May 14 NZPA - New Zealand has a very different legislative framework to Australia for bank fees, the New Zealand Bankers Association says in response to a report that banks here face a massive lawsuit against so-called exception fees.

The Dominion Post reported the lawsuit was potentially for hundreds of million of dollars and followed a similar multi-billion action in Australia.

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.

ASB, ANZ New Zealand, BNZ and Westpac are all Australian-owned and many charge similar fees, although some banks have slashed them 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.

New Zealand Bankers' Association chief executive Sarah Mehrtens said there were some very important differences between the Australian and New Zealand markets.

With respect to fees, New Zealand had a different legislative framework to Australia, she said, and the Credit Contracts and Consumer Finance Act 2003 has been in place for many years, providing strong consumer protection to banking customers. "New Zealand banks provide their customers with a package of products and services to meet their banking needs, and we believe the combination of fees and interest rates customers pay are fair and reasonable. Customers also benefit from a significant number of services within their banking package being free," Ms Mehrtens said.

Most people would agree that customers who operated their accounts as agreed with their bank should not bear the very real costs of those who did not.

She spoke on behalf of association member banks ANZ, ASB, BNZ, Citibank, HSBC, Kiwibank, National Bank, Rabobank, TSB and Westpac.

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.

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

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

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, he said.

The commission would not comment.


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