Fees class-actions on backburner

Litigation funder IMF (Australia) will defer until later in the year, or even until 2012, decisions on whether to fund class actions against any banks other than ANZ over penalty fees charged on everyday accounts.

IMF has also decided not to broaden its class actions to penalty fees charged by any bank on other product categories such as home loans and personal loans.

Through its subsidiary Financial Redress, IMF yesterday circulated a letter from Maurice Blackburn to more than 150,000 claimants registered with the firm.

In May 2010, this trio of protagonists began seeking claimants for what was promoted at the time as a series of class actions against banks.

In September 2010, Maurice Blackburn filed the first, and so far only, class action on behalf of 27,000 claimants against ANZ in the Federal Court. The number of claimants registered for the ANZ action has since increased to 32,000.

After several rulings adverse to ANZ in respect of its approach to the case, this action is now due for a hearing on key legal issues in October 2011.

In yesterday's circular, Andrew Watson, principal at Maurice Blackburn, wrote that "in a connected set of class actions such as these IMF must consider complex financial, strategic and tactical issues when deciding whether to commence funding of a particular case.

"IMF has considered a range of strategic questions related to the commencement of proceedings against banks other than ANZ.

"On balance, we agree that the best strategy is to defer the commencement of any class action relating to banks other than ANZ until after October 2011 when some important legal issues in the ANZ class action are resolved."

Watson added that "in these circumstances IMF has advised that it will not provide funding for the commencement of a class action relating to banks other than ANZ until that time. As a result we will not issue your case at present."

Maurice Blackburn and IMF have claimants for actions against eight other banks and their subsidiaries: Commonwealth, NAB, Westpac, Citibank, Bank of Queensland, Bendigo and Adelaide Bank, HSBC and Suncorp.

In a covering email with the circular, James Middleweek of Financial Redress and Hugh McLernon of IMF wrote that "Commonwealth, Westpac, NAB, and Citibank are the next obvious targets, then St George and BankWest." The latter two are now subsidiaries of CBA and Westpac, respectively.

They acknowledged a lack of claimants to make a class action viable for the remaining banks, writing that "there may well be an opportunity to settle cases against the smaller banks, where sign-up is currently below required levels, by negotiation."

Of the ANZ case, Maurice Blackburn noted that "the case is being vigorously defended by the bank [with] attempts being made to delay it and it is very expensive to conduct."

Watson wrote of the ANZ hearing scheduled for October 2011 that it "should also provide some guidance from the court on legal principles relevant to claims against banks other than ANZ."

One reason for the timing of the circular is to give claimants an opportunity to opt out of their current agreement with Financial Redress and seek refunds of penalty fees directly from the banks.

Watson included a note of caution in the circular.
 
"We consider that you have a good claim against one or more of the banks named above in respect of fees charged to you by your bank(s), although the law in that regard is difficult and not settled, and your case is likely to be strenuously defended."