Australia's law firm takes action against banks for unjust penalty fees

14:05, May 13, 2010      

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Australia's law firm Maurice Blackburn on Thursday said more than 20,000 unhappy bank customers have already signed up to join Australia's largest ever to recover allegedly unjust penalty fees.

Maurice Blackburn chairman Bernard Murphy has estimated that in the past six years, banks had charged at least 5 billion Australian dollars (4.5 billion U.S. dollars) in exception fees.

Maurice Blackburn's claim will focus on a raft of exception fees charged by banks over the past six years.

No overseas precedents had been set for the action, although Murphy said a similar case had been brought by the United Kingdom Office for Fair Trading in 2008.

Murphy said that under contract law in Australia, penalty fees charged must reflect the damages suffered by the bank.

According to Murphy, the banks had levied punitive charges, not merely recovery charges.

Source: Xinhua

If the fees did not reflect the cost to banks of the breach, they were illegal, Murphy said.

Murphy said Maurice Blackburn did not expect to file the claim in the courts for at least four weeks and it was hoped the banks would enter into settlement negotiations.

The action was being backed by litigation funder IMF Australia, which has said it would support two class actions against local and foreign banks if each action attracted as many as 10,000 claimants.

Financial Redress Pty Ltd, a wholly owned subsidiary of IMF, has estimated the 12 banks reaped 5 billion Australian dollars in exception fees during the past six years.

Source: Xinhua
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