Court finds ANZ’s late credit payment fees excessive in warning sign to businesses

The ANZ bank’s fee for late credit card payments has been found to be “extravagant, exorbitant and unconscionable” by a Federal Court of Australia judge.

Justice Michelle Gordon ruled yesterday on a class action brought against ANZ by law firm Maurice Blackburn and funded by Bentham IMF (Australia) on behalf of over 43,000 ANZ customers.

It was ruled that the fee of $20 to $35 was much more than late payments cost the bank, which was around 50 cents to $5.50 per late payment.

Consumer group CHOICE chief executive Alan Kirkland said the decision should send a message to businesses that late fees must reflect actual costs.

“We welcome the Federal Court decision today, which should make it very clear that the days of charging excessive fees to bolster profits are over,” he said.

“It’s not the role of a business to punish customers,” he said. “We expect to see late payment fees to come down in other sectors, such as telecommunications, as a result of this decision.” 

Justice Gordon found late payment fees charged more than six years ago could be claimed by customers in compensation, as they were not barred by the statute of limitations. This could lead to millions in back payments to customers.

The late credit payment fee was one of five fees in question, with the judge ruling in favour of the bank on the other four fees. The other disputed fees were over-limit fees on credit cards, as well as honour, dishonour and non-payment fees on deposit accounts for Australian customers. Justice Gordon said these fees were not illegal.

ANZ chief executive Australia Philip Chronican said in a statement he was pleased these four fees were not deemed penalties. In regard to the late payment fee ruling, Chronican said the implications were “still far from clear and it is likely to be some time until this matter is finally resolved”.

Law firm Maurice Blackburn said in a statement the ruling on the late credit card payment fine means that thousands of customers should be compensated.

It said the judgment will set the precedent for seven other Australian banks that have similar class actions awaiting them. These include the Commonwealth Bank, Westpac, NAB, BankSA, Bankwest, Citibank and St George.

Maurice Blackburn head of national class action Andrew Watson said it had been a “long tough fight”.

“What has been decided by the court will mean a better deal for bank customers from now on, and potentially a better deal for consumers more broadly where these same principles apply.”