Australia and New Zealand Banking Group (ASX: ANZ) win in the high court means banks are free to charge their customers late payment fees of up to $35.
In a 6-year court case, Australia's High Court eventually dismissed an appeal by thousands of ANZ Bank customers who had claimed the bank had unfairly charged them for paying credit card bills late.
Lawyers for the ANZ customers had argued that the fee was much higher than the actual cost to the bank – but the court disagreed. ANZ claimed that the maximum cost to banks of late payments should consider making provisions for bad loans, holding capital and debt collection costs as well as other costs.
National Australia Bank Ltd (ASX: NAB) had settled with its customers earlier this year for $6.6 million out of court.
Several other banks including Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) were eagerly watching the results of the ANZ case – with a number facing similar class actions against them if it had been successful.
Litigation funder IMF Bentham Ltd (ASX: IMF) has also seen a big lump of potential revenue dry up – no wonder the share price is down 5.7%.
Instead, it means that banks are free to charge huge fees to their customers for late payment on credit cards, personal loans and other forms of finance. It also has implications for utilities and telecommunications providers who potentially have the ability to increase their late payment fees.
According to RateCity.com.au, banks take in $4.3 billion in fees in 2015 – cash that consumers could have avoided paying out. $1.5 billion of that was in the form of annual fees, late payment fees and cash advance fees.
Consumers can easily avoid those fees, with many no-fee options out there and simply using their own common sense. Paying bills on time, switching to no-fee options and cutting up our credit cards would all save us a fortune.
