Credit card late payment fees to stay

A multimillion-dollar class action that has been running through the hierarchy of courts for the past 6 years between ANZ bank and 43,500 ANZ customers has today finally been decided once and for all.

The main issue that was the subject of the proceedings was the legality of credit card late payment fees.

ANZ customers took ANZ to Court on the basis that the late payment fees for credit cards are extravagant, unenforceable and amounted to unconscionable conduct.

In 2014 the Federal Court found that some of the bank’s charges were illegal as the late payment fee for a credit card was $35.00. It is now known that the actual cost to the bank was often as little as 50 cents.

However, in 2015 the full Federal Court reversed this decision. As a consequence, the solicitors for the customers of ANZ sought leave to appeal to the High Court of Australia.

In 2015, Mr Watson, solicitor for the ANZ customers, stated that the decision to reverse the finding that the bank’s charges were illegal,

“runs the risk of turning the doctrine of penalties and the statutory provisions on which we rely into empty vessels devoid of any practical or meaningful content, and significantly reducing the protection for all consumers in Australia.”

Today, the High Court of Australia handed down its decision over the matter.

It was ruled that the proceedings brought by the 43,500 ANZ customers were to be dismissed and that ANZ are able to charge customers fees, as well as interest, for the late payment of credit cards. It was found that the charges were not established to be “penalties” and that the bank was entitled to recover losses that they sustained due to late payments.

Other big banks including Commonwealth Bank, Westpac and St George also faced similar proceedings as ANZ. Perhaps unfortunately for NAB, a settlement worth $6.6 million in compensation for customers was reached before today’s decision.

In light of the decision today, banks can be comforted in charging their customers who are late in the payment of their fees.

This decision is also likely to be seen as a big win for telecommunication and energy companies in dealing with customers who are late in their payments.

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