ONE thousand people an hour have swamped the hotlines at IMF Australia as the litigation firm confirmed it would fund a series of class action lawsuits against the big banks, which it claims have overcharged customers $5 billion in penalty and late fees.
The class action is set to be the biggest in corporate history and will target 12 banks, including the ANZ, Commonwealth Bank, National Australia Bank and Westpac, foreign banks and the regional banks.
After news of the action broke on the Herald’s website at noon yesterday, public interest in the case hit fever pitch.
“It’s been bedlam. The interest is huge because of the pent-up anger these fees generate,” the chief executive of IMF, Hugh McLernon, said.
IMF – which provides funding for lawsuits in return for a slice of the winnings – will bankroll the legal fees in an effort to claw back at least $400 million in what its lawyers will claim is a systematic gouging of banking customers. The size of the claim could be much higher depending on how many Australians join the $5 billion action.
The action comes at a delicate time for the banks as politicians accuse them of exploiting their heightened market dominance – in the aftermath of the global financial crisis – to ratchet up fees and charges to unreasonable levels.
The Family First senator, Steve Fielding, said yesterday he welcomed the class action.
“We’re talking about millions of dollars which have been ripped out of families. People are sick and tired of the banks ripping them off with outrageous fees and hopefully this class action will send them a clear message that they won’t be allowed to get away with it any longer.”
Exception fees typically include four types of penalties for which customers are stung by the banks. These are honour fees (generally a penalty fee of $40 incurred when a customer overdraws on a bank account or exceeds an agreed overdraft limit and the bank pays it out); dishonour fees 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 $25 and $60 on each transaction.
IMF, which has set up a website to attract possible participants in the class action, will test the legal basis of these fees in its class action.
”Banks have made billions from these unfair charges,” the website says, urging anyone with at least one exception fee over the past six years to sign up.
The central legal argument is that one party to a contract, when it seeks damages from the other party for breaking a contractual term such as a late payment, can only recover a reasonable pre-estimate of its actual costs.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.