Half of banks targeted in class action cut card fees

19 May 2010
MELBOURNE, May 17 AAP - Only half of the 12 banks targeted by Maurice Blackburn and IMF Australia Ltd's $5 billion class action cut their average fee for late payment on credit cards over the past six years, research shows.

The number of claimants rushing to join Australia's biggest class action over banks' exception fees exceeded 82,000 on Monday.

The research from financial comparison website RateCity shows four banks have lifted exception fees on credit cards over the six years under question by Maurice Blackburn.

The law firm and IMF's subsidiary Financial Redress Pty Ltd are targeting 10 domestic and two global banks for charging what they claim are excessive punitive fees on transaction and credit card accounts from 2004.

The case will focus on honour, dishonour, over-limit and late payment fees which Maurice Blackburn claims were punitive charges as they were much higher than the actual cost to the bank for a breach of contract on the accounts.

From May 2004 to May 2010 four of the banks, including global giant HSBC, increased their fees charged for late minimum payments on credit cards by an average of 35 per cent.

RateCity compared the average numeric fee across each institution's card products attracting a late payment fee.

It found the fees charged by Bank of Queensland (BOQ), BankWest, Suncorp Metway and HSBC were at least 26 per cent higher this month than in May 2004.

Commonwealth Bank of Australia (CBA) and Bendigo and Adelaide Bank held their average fees steady over the six years.

ANZ Banking Group, Westpac, National Australia Bank (NAB), Bank of South Australia (Bank SA), St George Bank and Citi cut their average fee.

Excluding Citi, these banks made the fee cuts during the previous 12 months, under pressure from NAB's fee-cutting campaign.

Citi lowered its average fee from $60 to $40 by May 2009, and this remains the highest average fee in the market.

NAB's average $5 fee is the lowest.

Citi, along with the same four banks that increased their fees, also raised their average fee charged to customers who exceeded their credit card limit, RateCity's research showed.

The average fee increase across the five institutions over the past six years was 45 per cent.

Westpac, CBA and Suncorp had no unauthorised overdraft fees applying to transaction accounts during the six years, RateCity said.

Apart from Citi, all remaining banks reduced or abolished their unauthorised overdraft fees on transaction accounts over the past 12 months.

Citi's unauthorised overdraft fee remains the highest at $35.00 per transaction.