UPDATE 2.00pm ANZ bank is boosting its coffers and punishing customers by charging excessive fees for over-the-limit credit cards, overdrafts and overdrawn accounts, the High Court has been told.
A class action representing 38,000 ANZ bank customers began today, with lawyers hoping to have overturned a Federal Court judgment limiting which bank penalties are regarded as excessive.
It is part of Australia’s largest class action on behalf of 170,000 customers from ANZ, Commonwealth, NAB, Westpac, St George, Citibank, Bankwest and Bank SA who are claiming more than $220 million in excessive fees.
Justin Gleeson, representing the class action, argued the law should focus on whether the fees exceed the cost of any likely damage incurred by the bank and examine the purpose for the fees.
He said if an ANZ customer had an overdrawn account they could be charged a $45 dishonour fee or a $29.90 honour fee and have electronic access to their account terminated.
"The bank takes the self-help remedy of dishonour,” Mr Gleeson told the court’s full bench.
"It’s to deter a customer and punish them to the unjust enrichment of the bank."
Mr Gleeson said the size of the fee was excessive.
It was not comparable to the loss incurred by the bank and it was trivial to the bank to have an overdrawn account.
The true purpose of the fee was to deter customers from allowing an overdraft to occur.
"This is really a case where the bank has been receiving more than the full compensation ... the purpose of the fee is to keep the account within the agreed limit,” Mr Gleeson said.
In the case of an over-the-limit credit card, customers were charged a 4 per cent higher interest rate on top of the honour or dishonour fee.
Mr Gleeson said customers were charged for each day and every dollar they exceeded their limit.
"Why also the $29.90 fee?” he asked.
"It is a fee supposedly for a service with no content."
The argument centres around whether the charges are penalties or fees for a service.
In December the Federal Court found late payment fees were capable of being penalties and could be considered excessive and therefore illegal.
The class action is asking the High Court to find that other fees, including charges for overdrawn accounts and dishonour fees, can also be regarded as penalties.
Alan Archibald, representing ANZ bank, said Mr Gleeson’s argument narrowed the law before referring to judgments from the late 17th century.
The case continues.