NAB locks out the most vulnerable from unfair bank fees refunds

Consumer Action Law Centre has written to the CEO of National Australia Bank (NAB) requesting that vulnerable customers unfairly excluded from its bank fees class action deal be compensated.

On 6 April 2016, the Federal Court of Australia approved a settlement between NAB and its customers in relation to the charging of penalty fees. As part of the settlement, NAB will pay $6.6 million, however up to $4.1m of this will be paid to the litigation funder, IMF Bentham.

The Centre warns the deal comes at the expense of those who were not able to register for the class action. The settlement has the effect of extinguishing the rights of everyone charged the unfair fees by NAB (except those that opted out), and only provides compensation to NAB customers who registered for the class action with Financial Redress, a subsidiary of IMF Bentham.

‘In 2009, NAB abolished fees charged for dishonouring accounts and cut credit card late payment fees. At the time, NAB said that it was responding to customers who told them these fees were unfair’, says Gerard Brody, CEO of Consumer Action.

‘If NAB responded to customer concerns about unfairness then, it should respond to the fact that many customers may miss out on the settlement because they didn’t know about or couldn’t register for the class action.’

Consumer Action is most concerned about marginalised Australians, including those experiencing illness, disability or older consumers that were less likely to be aware of the requirement to opt into the class action.

‘In our casework experience, it‘s the most disadvantaged that are charged regular and multiple bank penalty fees’, says Brody.

Many banks still charge high penalty fees, including for late payment on credit cards and for overdrawing or dishonouring accounts.*

“NAB increased its late payment fee on credit card accounts from $5 to $9 on 1 March 2016”, says Brody. “This is an 80 per cent increase. It’s very concerning if banks are incrementally increasing their penalty fees, which consistently and disproportionally impact the most vulnerable Australians.”

The settlement highlights the need for reform to class actions in Australia.

“Class actions are an important tool to ensure access to justice and to hold corporates to account”, says Mr Brody. “However, it’s not fair that people can be so easily shut out by not ‘opting-in’ to join. We need a regime that ensures class action settlements benefit all consumers who are affected by corporate misconduct.”


* Examples of penalty fees payable (some banks do not charge these penalty fees on concession-style accounts):

NAB Credit card late payment fee – $9
ANZ Credit card late payment fee – $20 (no fee if customer holds ANZ Access Account)
Bank of Melbourne Credit card late payment fee – $9
Bank of Qld Personal transaction account dishonour fee – $15
Bendigo Bank Direct debit dishonour fee – $40

Personal transaction account overdraw fee – $25

CBA Credit card late payment fee – $20
HSBC Credit card late payment fee – $30
Westpac Credit card late payment fee – $9


Notes for editors:

  • The Federal Court judgment approving the class action settlement can be found here.
  • A maximum $4.1m of the proposed settlement of $6.6 million will be payable to the funder of the litigation, IMF Bentham. If this is the case, it leaves only $2.5m to be split among NAB customers. IMF Bentham have said that this may be lower depending on the outcome of the ANZ High Court appeal.
  • It is not clear how many customers will participate in the settlement outcome or the numbers of fees that were charged. The approved settlement distribution scheme was confidential.
  • The High Court appeal proceeding of Paciocco v ANZ Banking Group, which relates to certain credit card late payment fees, was heard by the High Court on 4 and 5 February 2016, and a decision is awaited.
  • The need to reform class actions has been flagged previously. In August 2015, Justice Wigney of the Federal Court noted that ‘there is something to be said for the proposition that some form of common fund approach … should be adopted in Australia to deal with the reality of commercial litigation funding in representative proceedings. It would, however, perhaps be preferable for that to occur as a result of legislative reform…’.
  • What are class actions? A class action is legal action by one person on behalf of a group of people. The main benefit of class actions is that they enable a dispute involving potentially large numbers of people to be resolved by way of a single case. Class actions became possible in Australia when the Federal Parliament amended the Federal Court of Australia Act1 (“the FCAA”) in 1992 to introduce the “representative proceedings”, the equivalent of the American “class actions”.

Read the full letter here [PDF]

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