Class Action Against Local Banks & Foreign Banks For Repayment of Dishonour And Late Fees

According to the Australian ABC website, "Up to 500,000 people are expected to join a class action against local and foreign banks for repayment of dishonour and late fees" http://www.abc.net.au/news/stories/2010/05/13/2898166.htm

The ABC and many of it's counterparts in the Australian media are reporting that banks have collected nearly $1.2 billion fees in dishonour and late fees the 2008 financial year. The fees are comprised of honour and dishonour fees on bank accounts, and over-limit and late fees on credit cards. It is alleged that the banks have illegally charged in excess of $5 billion over a past six year period.

The litigation proceedings are being funded by Financial Redress, a subsidiary of litigation funder IMF. Maurice Blackburn Lawyers is the legal firm in charge of the class action.

Having studied contract law a for a little while, this case is of particular to me because it will be based on a claim that the fees are illegal because they amount to a penalty rather than a legitimate fee.

The ABC website quotes, IMF's chairman Bernard Murphy as saying "There's a contract law provision which states that if one party breaches a contract the victim of the breach is only allowed to charge a genuine pre-estimate of the damages for that"

Just from my experience in banking, and in particular the very strong feedback I received from angry customers (when it came to dishonor and other penalty fees) I get the feeling that there are going to be more than just a few disgruntled customers seeking revenge. oops, I mean compensation.