Lawyers consider dropping part of fees case if ANZ shares homework

Q: What are ANZ "exception fees" and when are they charged?

ANZ exception fees are charges the bank applies when customers overdraw their accounts, exceed credit card limits or bounce cheques. The class action challenges whether those fees were fairly charged to customers.

LAWYERS for 30,000 ANZ customers who are suing the bank over so-called "exception fees" may drop one of the two legs of their case if they are given more information about the bank's costs, a court heard yesterday.

By InvestSMART · 11 Feb 2011

By InvestSMART ·
11 Feb 2011

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But working out whether consumers have been overcharged for exception fees, which are charged for overdrawing accounts, exceeding credit card limits or bouncing cheques, could take up to 14 months and cost "multi-millions" of dollars, the Federal Court was told.

ANZ intends to rely on an expert report prepared by Will Inglis, a London-based partner in accounting firm Deloitte, who previously provided expert advice to a bank fighting a British Office of Fair Trading probe into exception fees.

Mr Inglis was questioned yesterday in Melbourne by Federal Court Justice Ray Finkelstein.

Asked by Justice Finkelstein how long he thought the costing exercise would take, Mr Inglis said it was likely to be closer to 13 months rather than the 14 months suggested by the law firm Maurice Blackburn's counsel, Michael Lee.

Justice Finkelstein suggested Deloitte might be able to use costing information already collected by the bank to take "short cuts".

"There are a lot of cases where near enough is good enough," he said.

"You could spend the rest of your life doing these calculations."

But Mr Inglis said the task was difficult because bank data was not sufficiently detailed to work out the cost of exception fees.

"You need to have quite an accurate picture of how everything flows through the system," he said.

Mr Lee, for Maurice Blackburn, asked the court to order ANZ to hand over the calculations it had already done on exception fees.

ANZ had made a "positive allegation" that the fees were not extravagant and unconscionable, he said.

"There must be some rough and ready work that's been done to allow them [make] that statement," he said.

He said that if Maurice Blackburn was provided with that work, it might drop the unconscionability claim.

This would leave Maurice Blackburn with a claim that the fees charged are out of proportion to the damage experienced by the bank.

"At the moment we think the unconscionability part of the case is an important one, and we intend to run it," Mr Lee said.

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Frequently Asked Questions about this Article…

What are ANZ "exception fees" and when are they charged?

ANZ "exception fees" are charges the bank applies when customers overdraw their accounts, exceed credit card limits or bounce cheques. The class action challenges whether those fees were fairly charged to customers.

Who is bringing the legal action against ANZ over exception fees?

About 30,000 ANZ customers are part of a class action brought by law firm Maurice Blackburn, alleging the bank’s exception fees were excessive or unconscionable.

What are the two parts of the ANZ fees case that lawyers are pursuing?

The case includes an unconscionability claim (that the fees were extravagant and unfair) and a separate claim that the fees were out of proportion to the damage experienced by the bank. Maurice Blackburn has said it intends to run both claims unless circumstances change.

Could the lawyers drop part of the ANZ fees case if ANZ provides costing information?

Yes. Maurice Blackburn told the court it might drop the unconscionability claim if ANZ hands over the costing work or calculations it used to say the fees were not extravagant, leaving only the claim about fees being out of proportion to the bank’s damage.

How long and expensive could it be to work out whether ANZ customers were overcharged?

The Federal Court heard that determining whether customers were overcharged could take around 13 to 14 months and cost "multi‑millions" of dollars, based on testimony about the complexity of the costing exercise.

Who is ANZ relying on to provide expert analysis of exception fees?

ANZ intends to rely on an expert report by Will Inglis, a London‑based partner at accounting firm Deloitte, who has previously advised on exception‑fee matters in the UK and was questioned in the Federal Court hearing.

Why did the Deloitte expert say calculating the cost of exception fees is difficult?

Will Inglis told the court the task is difficult because the bank’s data isn’t sufficiently detailed to identify the true cost of exception fees. He said you need an accurate picture of how transactions flow through the system, which the available data may not show.

What did the court and lawyers say about using ANZ’s existing costing work?

Maurice Blackburn asked the court to order ANZ to hand over any costing calculations it has already done. The judge suggested Deloitte might be able to use cost information the bank has collected to take "short cuts," but the Deloitte expert warned the existing data may not be detailed enough.