UPDATE: NZ banks face class suit over $1 bln in default fees

UPDATE: NZ banks face class suit over $1 bln in default fees

(Adds comment from lawyers throughout)

March 11 (BusinessDesk) - The country's registered banks have been accused of overcharging 1 million kiwis to the tune of $1 billion in default fees claimed by lenders over the past six years and face what's being billed as New Zealand's biggest class action.

Auckland-based lawyer Andrew Hooker, Australian consumer law firm Slater & Gordon and Litigation Lending Services, a litigation funding firm, are seeking plaintiffs to join a class suit against New Zealand's registered banks to reclaim fees charged when customers overdraw their accounts, pay credit card bills too late, or bounce a cheque.

"The reason for this class action is the unlawful overcharging of kiwis for many many years," Hooker told media in Auckland. "Under contract law in New Zealand, default fees must reflect actual costs to the party charging those default fees."

The New Zealand action comes after a similar suit across the Tasman, where Australia & New Zealand Banking Group is being treated as test case.

Hooker said the market share of the local banks would probably be representative of their share of the suit, with the Australian-owned banks and state-owned KiwiBank the biggest offenders.

Michelle Silver, managing director of Litigation Lending Services, said the action has a minimum threshold of 10,000 people to proceed and she expects at least 50,000.

The funding firm stands to gain a 25 percent commission if successful on a no-win no-fee basis, while Hooker expects his legal costs and disbursements to be $3.5 million.

The proceeding comes as Justice Minister Judith Collins works on legislation to enable faster, better and cheaper class suit actions. That policy work was expected to be done last year.

Shares in Australia & New Zealand Banking Group edged up 0.03 percent to $36.21 on the NZX, while Westpac Banking slipped 0.1 percent $38.77.

(BusinessDesk)

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