New Zealand Banks Face $1 Billion Lawsuit Over “Excessive” Fees

Registered banks in New Zealand are being sued for overcharging $1 billion in default fees to more than 1 million customers over the last six years, in what may be the largest class action lawsuit in the nation’s history, reported the New Zealand Herald on Monday.

Registered banks in New Zealand are being sued for overcharging $1 billion in default fees to more than 1 million customers over the last six years, in what may be the largest class action lawsuit in the nation’s history, reported the New Zealand Herald on Monday.

The “Fair Play on Fees” campaign – led by Auckland lawyer Andrew Hooker, Australian consumer law firm Slater & Gordon, and Litigation Lending Services – said that they were seeking a minimum of 10,000 plaintiffs to go up against the nation’s banks; claiming that the claimants would not be charged any legal fees if the case is lost.

“The reason for this class action is the unlawful overcharging of kiwis for many many years,” said Hooker, in a press conference on Monday. “Under contract law in New Zealand, default fees must reflect actual costs to the party charging those default fees.”

Hooker estimated that bank customers were being charged around $10-20 each time they overdrew their accounts, paid their credit card late or bounced a cheque, when the cost to the bank is actually just a few cents.

“These fees are excessive and add up to around $1 billion over the past six years,” he said, adding that the default fees should, by law, reflect what the actual cost is to the party charging the fee.

[quote]”When the amount customers are charged is higher than the actual cost to the bank, then it is unfair and legally unenforceable,” he claimed.[/quote]

Michelle Silver, managing director of Litigation Lending Services, said that the action needed to meet a minimum threshold of 10,000 people to proceed, but she expects at least 50,000 claimants to come forward.

In addition, the funding firm will stand on a no-win no-fee basis, with the campaign group set to gain a 25 percent commission only if the case is successful.

[quote]”Unlike the banks, we’re not about to charge you fees for no obvious gain. Instead, Litigation Lending Services (NZ) will fund all the legal costs, in exchange for a right for them to be reimbursed if the claim succeeds along with 25 per cent of the compensation.”[/quote]

Up to one million Kiwis may be eligible to sign up for a slice of the overcharged fees, said the group. A website has also been launched for people who want to be part of the lawsuit to register.

Hooker told 3 News that while he understood that banks had to charge fees as a matter of business principles, the over-exorbitant fees had been far too damaging to customers.

[quote]“Banks are in the privileged position of having access to customers’ funds and can just extract these fees from customers without much of a right of reply. They have also relied on individuals not making the effort to take the banks to court.”[/quote]

“It’s time Kiwis fought back,” he said.

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Among the major banks included in the lawsuit include the big four Australian-owned banks – BNZ, ANZ, Westpac and ASB – and state-owned Kiwibank. The New Zealand legal action comes after a similar suit in Australia, where ANZ is being treated as a test case.

“We think that these fees are unfair and should be challenged in court. Although the amounts ($15 to $35) sting you, because litigation is expensive it has not been worth taking the banks on by yourself. In Australia, lawyers have launched class actions valued at about $280 million to recover these fees. We think it’s time for New Zealanders to band together and stand up to the banks,” said the campaign’s website.