Case Highlights ANZ’s Reliance on Default Fee Revenue

Wednesday 4 December 2013

Australian Bank Fee Case Highlights ANZ’s Reliance on Default Fee Revenue

The Australian trial against Australia and New Zealand Banking Group has revealed details of the bank’s reliance on default fee revenue, and efforts made by the bank to preserve as much of this income as possible against a “headwind” of community and regulator concern.

The case makes similar allegations as those made in a case against ANZ Bank New Zealand filed by the Fair Play on Fees campaign in the High Court in Auckland during June this year.

In opening the case, counsel for the Australian plaintiffs revealed details of high-level internal documents obtained from the bank through the court process. A 2006 review of default fees stated that the bank’s intention was to “improve revenue streams”, and noted that income from the fees largely came from low value accounts.

A January 2009 document demonstrated that income from over-limit, late payment, honour and dishonour fees accounted for $AUD285.5 million in the 2008 financial year.

As community concern about the fees increased, pressure from both Australian regulators and the general public began to weigh on the bank. Internal emails read out in court by counsel for the plaintiffs showed ANZ staff members querying one another “How much can we charge over and above our costs?”

Subsequent documents demonstrated that ANZ’s response to these concerns largely focused on redrafting the “names” of the fees and the terms and conditions which gave rise to them, rather than abolishing the fees altogether.

Following questions from the judge, counsel for ANZ acknowledged that the bank had not set the fees with reference to the cost to the bank of the customer’s default.

Fair Play on Fees Australian based advisors Slater & Gordon are keenly observing the trial, run by fellow class action firm Maurice Blackburn, to note the way that the law of penalties is applied and to identify evidence which may assist claimants in the New Zealand case.

“The case in New Zealand will be different as different laws apply in New Zealand, but we expect to discover that the practices used by the bank are largely the same,” explained Slater & Gordon class action lawyer Ben Hardwick. “By following this case, we will ensure claimants in New Zealand, who are typically paying higher default fees than Australians in the same situation, have the benefit of the information released during this trial.”

The legal principle applied in the case dates back to 17th century England, and is a feature of both New Zealand and Australian law.

Under a deadline set by the High Court in Auckland, customers of ANZ in New Zealand have until midnight on Friday, 13 December to register for the case. They can do so at www.fairplayonfees.co.nz.

Slater & Gordon has partnered with New Zealand lawyer Andrew Hooker and litigation funder Litigation Lending Services in the case.

The litigation is structured to ensure claimants have no upfront costs and nothing to lose by joining the action. All legal fees and other expenses are covered by Litigation Lending Services Limited on a no win, no fee basis.

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About Andrew Hooker

Andrew is an Auckland based lawyer specialising in civil litigation. He has more than 20 years’ experience in insurance related litigation. Prior to working as a lawyer Andrew worked in claims and sales for a major New Zealand insurance company and also set up and ran a nationwide specialist insurance investigation company.

About Slater & Gordon

Slater & Gordon is Australia’s largest consumer law firm. For 75 years, Slaters have been standing up for the rights of ordinary working people, not big companies. Slater & Gordon have been pioneers in Australian class actions over the past 25 years. They will be lending their expertise in tough, large-scale litigation to this case as legal advisors.

About Litigation Lending Services

Litigation Lending Services is a litigation funding firm which will provide financial support to the case. Its parent company, Litigation Lending Services, has been operating for over 13 years in both Australia and New Zealand. Having established itself funding general commercial claims, the company has expanded over the past five years and has also funded a number of successful class actions.

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