Citi targeted in fees class action

Four more banks will have to respond to class actions over penalty fees on common bank accounts. Law firm Maurice Blackburn said on Friday that it had begun proceedings against Citibank, Commonwealth Bank, National Australia Bank and Westpac.

ANZ is already defending an action that commenced 14 months ago. Two weeks ago, a Federal Court judge ruled in favour of ANZ on legal issues in that case, which is in relation to 13 out of 17 contested fees.

But the judge did find that four fee types, which may represent around a third of A$50 million claimed from ANZ, were penalties. A second trial on other aspects of the case will take place next year.

IMF (Australia), the litigation funder financing the action managed by Maurice Blackburn, has said it will seek leave to appeal directly to the High Court on the ANZ ruling.

Maurice Blackburn said it estimated the value of contested fees in the four new cases at A$147 million.

The litigants have been researching the merit of this class action for many years, but only began soliciting bank customers to support a potential action in the first half of 2010.

By this stage most banks had already reduced the level of most dishonour and exception fees and in some cases eliminated such fees altogether. NAB led the industry in this initiative in 2009.

The value of the allegedly exorbitant fees that are central to the action (and commonly in the order of $35) are thus diminishing, assuming the usual six year statute of limitation applies in this case. Maurice Blackburn disputes that there is any such limitation on the claims for damages.

In a public relations statement made on Friday to promote the new actions, Maurice Blackburn pointed out that Citibank continues to charge penalty fees of $40 in some instances. According to the firm, these fees are "way beyond any reasonable estimate of cost."