Big Four banks to be stung for their dodgy fees

ARE the big banks about to get their comeuppance? You might be entitled to hundreds in compensation if people power wins the day.

ARE the big banks about to get their comeuppance?

In 2013, Australia’s banks made $4.13 billion in banking fees from everyday customers, an increase of 2.3 per cent from the previous year and the highest since 2010.

According to analysis from comparison brand Mozo, that figure amounts to $487 for each Australian household, including $68 in exception fees. Exception fees are the fees you are charged when you do something you’re not meant to, such as paying your credit card late or overdrawing your account.

It’s the late payment fees that will be at the heart of a class action lawsuit launched by law firm Maurice Blackburn who named Westpac (and subsidiaries St George and BankSA), ANZ and Citibank as the initial defendants. The lawsuit is expected to extend to Commonwealth Bank (and subsidiary BankWest), NAB and American Express.

25/10/2010 BUSINESS: The Australia & New Zealand Banking Group Ltd. (ANZ) logo is displayed on a bank branch in Sydney, Australia, on Monday, Oct. 25, 2010. Three of Australia's four largest banks are set to post second-half profits that match or exceed earnings before the global financial crisis as bad debts ease in an economy benefiting from the biggest mining boom in a century. Photographer: Sergio Dionisio/Bloomberg

The firm argued the late fees are an unfair payment because while customers can be charged up to $35.00 each time, the cost to the bank is less than a dollar.

Best of all for consumers, you don’t need to register to be part of the class action. If the firm is successful, anyone who’s been a customer will be entitled to some form of compensation if they’ve ever been stung by the fees.

The head of Maurice Blackburn’s class action practice, Andrew Watson, said in a statement: “What we’re doing today opens the gates of justice to millions more Australians and means that previous estimates of the numbers of people affected and the compensation amounts owed will be dwarfed by the new state of play.”

The suit comes at a time when the Big Four banks have reaped huge profits. ANZ announced half-year profits of $3.5 billion in the six months to March while Commonwealth Bank posted a $4.2 billion half-year profit in the six months to December. Westpac’s notched up $3.62 billion in the six months to March while NAB reported a profit of $2.9 billion in the same period.

Mozo spokesperson Kirsty Lamont told news.com.au: “Part of the problem is bank fees in Australia are not regulated and there’s very little competition. As a result, we’re paying a huge amount in fees.”

Customers use automatic teller machines (ATM) outside a branch of Commonwealth Bank of Australia (CBA) in Melbourne, 11 Aug 2004, while a display screen shows CBA shares are up after the bank posted a 28 percent rise in net annual profit. AFP picWilliam/West logo logos ATMs

Ms Lamont said when a bank charged a customer more than it costs them to process something, it’s profiteering. She said: “When, for example, you have an overdraft fee of $40 and it takes the banks a few cents to process, it’s just profiteering.”

Ms Lamont said one of the reasons they banks have been getting away with it is because of the lack of competition, especially when ‘challenger’ brands such as UBank (NAB) and BankWest (CBA) are owned by the Big Four.

“[Even if the class action is successful], it’s unlikely the banks will change their behaviour without tougher competition and regulation,” she said. “The Reserve Bank has been toothless when it comes to banking regulation. When it took action on foreign ATM fees, the fees actually increased.

“It’s not taking a tough enough approach and as a result, we’re paying more than we should be for banking services.”

Originally published as Big Four banks to be stung for their dodgy fees