ANZ Wins Appeal in Class Action Lawsuit Over Credit Card Fees

   By Robb M. Stewart 
 

MELBOURNE, Australia--Australia & New Zealand Banking Group Ltd. (ANZ.AU) has successfully appealed a court ruling that some of its credit card fees were unlawful, a blow to thousands of customers who had launched one of Australia's largest consumer class actions.

More than 185,000 Australians had signed up to join lawsuits challenging charges including late-payment and over-limit fees on credit cards and so-called honor and dishonor fees on bank accounts. The law firm representing customers estimated the banks faced up to 240 million Australian dollars (US$184 million) in compensation payouts.

However, the Federal Court of Australia on Wednesday accepted ANZ's appeal of a ruling early last year that late-payment fees on credit cards it had issued were "extravagant, exorbitant and unconscionable."

The court also agreed with the earlier ruling that the other fees customers had sought to have refunded weren't unfair penalties.

Maurice Blackburn Lawyers, which is leading the action, said it planned to appeal each of the rulings in the High Court.

The case against ANZ was a test for broader action against several other banks, including Commonwealth Bank of Australia Ltd. (CBA.AU), Westpac Banking Corp. (WBC.AU), National Australia Bank Ltd. (NAB.AU) and Citigroup Inc.'s (C) Citibank. A wider class action on behalf of all customers charged a late payment fee by ANZ, Westpac and Citibank was filed in the Supreme Court last August. Those actions remain on hold until the ANZ case is finalized.

"It is perhaps appropriate that Australia's largest consumer class action will ultimately be determined by Australia's highest court and as a result of today's decision that's where we're headed," Andrew Watson, national head of class actions at Maurice Blackburn, told reporters in Melbourne.

"Our concern is that the way the full court approached matters renders the doctrine of penalties and the statutory conditions on which we rely as empty vessels," he said.

Mark Whelan, chief executive of ANZ's Australian operations, said the lender hoped Wednesday's judgment by the full Federal Court would put an end to the lengthy and expensive litigation.

"We were particularly pleased the court found there was no dishonesty on ANZ's part and these avoidable fees were fairly and fully disclosed," Mr. Whelan said.

The class action against ANZ, dating from September 2010, was the first to be filed and covered fees charged over a six-year period to 2010. More than 40,000 ANZ customers had signed up online to the lawsuit against individual fees that ranged from A$25 to A$45. ANZ introduced a new fee structure in December 2009.

National Australia Bank in November said it planned to settle its class action. A spokesman for the bank said a response to Wednesday's judgment was being prepared.

IMF Bentham Ltd., which is bankrolling the class actions, said it likely would write off about A$4 million in intangible assets and take a A$1.5 million provision for costs pending the appeal.

Write to Robb M. Stewart at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires