Class Action against Australian Banks Gains Momentum

Thursday May 13, 2010

In what has been tipped to be the largest ever class action in corporate history, the class action being brought against 12 banks is gaining swift momentum after reports that around one thousand people every hour are using the hotlines at IMF Australia, the litigation firm leading the action.

IMF Australia announced yesterday that it would be funding a number of class action lawsuits that intend to sue the big banks for approximately $5 billion in overcharged penalty and late fees on banking customers.

The fees (fees range from $25 and $60 on each transaction) specified within the class action that the lawsuits will be focusing on include:

• Late payment fees for credit cards or loan accounts

• Overdrawn credit card fees

• Honour fees which are charged whenever a bank customer overdraws on a bank account or exceeds the agreed overdraft limit of the account and the bank pays it out

• Dishonour fees for cheques that bounce

IMF has shown that according to Reserve Bank data, the Australian banks have charged $1.1 billion in these fees in 2009 while banks charged exception fees of approximately $1.2 billion in 2008/09.
At the heart of the case that IMF and Financial Redress have brought to the public is that when a bank account is opened the bank and a customer it is a legal contract, and under this guise one party is only ever able to seek to recover a reasonable pre-estimate of its actual costs of damages i.e. fees or late charges.

"Until very recently, some banks charged you up to $60 if you became overdrawn, went beyond an agreed limit, or made a late payment. The true cost might only have been a few dollars at most on each transaction. Banks have made billions from these unfair charges." IMF and Financial Redress stated on their website. This same website is equipped for people to join the class action by filling in a form and submitting to IMF.

The timing of the class action is perfect for IMF as the banks industry is already under fire from the Government for its fees charging and how it is treating its customers in the aftermath of the Global Financial Crisis. Recent first half profits from some of the big banks which showed $3 billion profit has led many to criticise the banks fees structure.

IMF has stated that it will take 25 per cent of the final damages rewarded if it wins but will charge nothing to its participants if it loses the case. The litigation company hopes to have the first case in the Victorian Supreme Court within three months.

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