MELBOURNE, Australia--Customers of one of Australia's largest
banks scored a partial victory Wednesday after a judge ruled
late-payment fees on credit cards issued by it were illegal, in a
test case that has implications for other banks involved in similar
class actions.
Federal Court judge Michelle Gordon agreed late-payment fees
charged by Australia & New Zealand Banking Group Ltd. were
"extravagant, exorbitant and unconscionable."
However, Ms. Gordon ruled in the judgment that other fees on
credit cards and deposit accounts that thousands of customers had
sought to have refunded weren't unfair penalties.
Bentham IMF Ltd., which funded the lawsuit, estimated late fees
accounted for about 25% of the claims against ANZ and could amount
to roughly 60 million Australian dollars (US$53 million). That
figure is likely to rise when interest is added in, its investment
manager, James Middleweek, said.
Mr. Middleweek said it was likely that the judgment on the other
fees would be appealed.
About 43,500 ANZ customers had signed up online to the lawsuit
to have individual fees ranging from A$25 to A$45 refunded.
Maurice Blackburn Lawyers, acting on behalf of the claimants,
had argued the actual cost to the bank was a fraction of the fees
charged. The law firm has filed similar suits on behalf of more
than 140,000 members with more than A$180 million in claims against
seven other lenders, including Commonwealth Bank of Australia Ltd.
(CBA.AU), National Australia Bank Ltd. (NAB.AU), Westpac Banking
Corp. (WBC.AU) and Citigroup Inc.'s (C) Citibank.
The class action against ANZ, dating from September 2010, was
the first to be filed and covered fees charged over a six-year
period to 2010. ANZ said it introduced a new fee structure in
December 2009.
"The implications of today's decision for ANZ and its customers
are still far from clear and it is likely to be some time until
this matter is finally resolved," said Philip Chronican, chief
executive of ANZ's Australian operations.
Mr. Chronican said the bank was pleased the court decided that
other fees including overlimit fees on credit cards and nonpayment
fees on accounts weren't penalties.
Ms. Gordon in her judgment said that while late-payment fees on
credit cards constituted a penalty, the other fees were of a
different character. Both sides have been told to discuss damages
and penalties before returning to the court by Feb. 12.
The ruling represents a blow to the reputation of Australia's
banks, although the amount that they stand to pay out in claims is
small in terms of the size of their balance sheets, said one
Sydney-based analyst, who declined to be named. The banks lowered
fees from the end of 2009, so no further changes are likely, he
added.
Write to Robb M. Stewart at robb.stewart@wsj.com
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