Comment:
Now this is about time, I have long wrote to the Bank Negara Malaysia, and complaint to them about the late fees charges on credit cards, and the so-called dishonor cheques fees (charges/penalties). The late fees charges is so exorbitant, which the bank can easily overcome with just a click of the mouse, yet they choose to issue penalties on its loyal customers.
Now this is about time, I have long wrote to the Bank Negara Malaysia, and complaint to them about the late fees charges on credit cards, and the so-called dishonor cheques fees (charges/penalties). The late fees charges is so exorbitant, which the bank can easily overcome with just a click of the mouse, yet they choose to issue penalties on its loyal customers.
Also the interest charged on credit card of 15-18 percent per annum (by Malaysian banks) are simply too high. It simply make the poor man poorer!
http://au.biz.yahoo.com/y7finance_editorial/12052010/half_million_tipped_join_class_action_on_bank_fees.html (Accessed on 13th May 2010)
Half a million tipped to join class action on bank fees
Thursday May 13, 2010, 1:00 pm
By: Lexi Metherell and Shane McLeod, ABC
Up to 500,000 people are expected to join a class action against local and foreign banks for repayment of dishonour and late fees. Official figures show the banks collected nearly $1.2 billion in such fees in the 2008 financial year. The money came from honour and dishonour fees on bank accounts, and over-limit and late fees on credit cards.
Financial Redress, a subsidiary of litigation funder IMF, is funding the litigation against 12 banks who it says have illegally charged well over $5 billion over the past six years. The case will be based on the claim that the fees are illegal because they amount to a penalty rather than a legitimate fee.
Financial Redress managing director James Middleweek says the action will try to recoup as much of that $5 billion as possible, but it depends how many people make claims. "Realistically if we got 300,000, 400,000 people to sign up over the course of the next few weeks and months we'd have a sort of 600, 700, 800 million [dollar] class action," Mr Middleweek said. Maurice Blackburn Lawyers are the solicitors running the action.
The firm's chairman Bernard Murphy says the public response has been overwhelming, with 3,000 registrations on the company's website as of last night. "We're the largest class action law firm in the country and we've never seen a response like it," he said.
http://au.biz.yahoo.com/y7finance_editorial/12052010/half_million_tipped_join_class_action_on_bank_fees.html (Accessed on 13th May 2010)
Half a million tipped to join class action on bank fees
Thursday May 13, 2010, 1:00 pm
By: Lexi Metherell and Shane McLeod, ABC
Up to 500,000 people are expected to join a class action against local and foreign banks for repayment of dishonour and late fees. Official figures show the banks collected nearly $1.2 billion in such fees in the 2008 financial year. The money came from honour and dishonour fees on bank accounts, and over-limit and late fees on credit cards.
Financial Redress, a subsidiary of litigation funder IMF, is funding the litigation against 12 banks who it says have illegally charged well over $5 billion over the past six years. The case will be based on the claim that the fees are illegal because they amount to a penalty rather than a legitimate fee.
Financial Redress managing director James Middleweek says the action will try to recoup as much of that $5 billion as possible, but it depends how many people make claims. "Realistically if we got 300,000, 400,000 people to sign up over the course of the next few weeks and months we'd have a sort of 600, 700, 800 million [dollar] class action," Mr Middleweek said. Maurice Blackburn Lawyers are the solicitors running the action.
The firm's chairman Bernard Murphy says the public response has been overwhelming, with 3,000 registrations on the company's website as of last night. "We're the largest class action law firm in the country and we've never seen a response like it," he said.
Mr Murphy says the case will hinge on contract law and the fact that penalty fees are in excess of what it costs the banks to process late payments or bounced cheques. "There's a contract law provision which states that if one party breaches a contract the victim of the breach is only allowed to charge a genuine pre-estimate of the damages for that," he said.
"So the situation we have here is that a person overdraws the account in breach of the contract with the bank and the bank's entitled to charge a genuine pre-estimate of the actual cost of that.
"Now that genuine pre-estimate would be, in some cases in relation to credit cards overdrawn, several cents. In relation to cheques, maybe $2.
"They've [banks] been charging $25 to $60. So we say the charges are extravagant and exorbitant. The law says that if those charges are extravagant or exorbitant then they amount to a penalty, which is illegal. "It's a very substantial action because, for example, in 2008 alone the Reserve Bank states that these exception fees totalled $1.2 billion," he said.
"So there is an estimated claim value in the order of $5 billion."
Australian banks have anticipated the threat to their fees and last year they started winding them back. National Australia Bank was one of the first to move to scrap dishonour fees, which is estimated to have cost NAB alone about $100 million.
"We see this as a first step, a small step in rebuilding our reputation which we've called out as a strategic issue," National Australia Bank chief executive Cameron Clyne said.
"As I said today this fee generates one in two of all the complaints the bank receives so we think it's a pretty good place to start."
Consumer group Choice believes there will be strong public interest in a class action. Choice spokesman Christopher Zinn says he has joined the class action as a private individual because there is an important legal issue to be tested. "We would imagine that there is real appetite for remedy on behalf of the public," he said.
"[Over the years we've had feedback such as people] writing to the bank saying what are you doing charging us these very high fees for what are often fairly mundane breaches, [like] being a bit late paying a credit card transaction?"
The Finance Sector Union, which represents workers in the banking sector, has mixed feelings about the planned class action. The union's national secretary Leon Carter says the lawsuit will bring some welcome attention to the sector, but it is not a long-term fix.
"Our concern is that if this lawsuit is successful the banks will simply make their money up somewhere else or even worse, sack staff to recoup any costs," he said. "The only long-term solution to this problem is better regulation."
Banks have unfairly deducted exception fees for years. Join the court action to get your money back. Visit www.financialredress.com.au or call 1300 473 373.
