A New Zealand-based law firm has lodged a class action against Australian owned banks ANZ and ASB on behalf of 150,000 home and personal loan customers.
Russell Legal claims the banks failed to refund more than 150,000 customers interest and fees charged on loans taken out from ASB Bank and the New Zealand arm of ANZ.
Brought under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), the class action alleges the banks failed to comply with their disclosure obligations, which ultimately saw customers charged interest and fees they were not liable for, for periods of up to five years.
According to documents supplied to InvestorDaily by solicitor Scott Russell, both ANZ New Zealand and ASB previously reached settlements with New Zealand’s Commerce Commission. ANZ agreed to pay customers NZ$35 million for breaches between 30 May 2015 and 28 May 2016, while ASB agreed to compensate its customers NZ$8.1 million for action taken between 6 June 2015 and 18 June 2019.
The settlements did not, however, compromise affected customers to take further legal action against the banks.
“The CCCFA is very clear. If a bank fails to comply with its disclosure obligations, it is not legally entitled to charge interest or fees on the affected loan until the failure is remedied,” said Mr Russell.
“To the extent a bank receives interest or fees it is not entitled to, it must refund or credit those amounts to the customer as soon as practicable. In this case, the banks have continued to charge interest and fees despite not being entitled to do so.”
“The banks’ failures to refund their customers constitute serious breaches of the provisions of the CCCFA,” Mr Russell said.
Anthony Simons, an ASB customer and a representative plaintiff in the Banking Class Action stressed that “ANZ and ASB think by admitting to breaking the law, the consequences don’t apply to them”.
“If the money paid by customers is not the banks’ to keep, then they should give it back. Not just a portion of it, but all of it,” said Mr Simons.
“Hiring expensive lawyers and agreeing to significantly reduced payments with regulators means the banks have avoided repaying what they owe to their customers. Banks are the first to enforce the rules when they are owed money, yet they ask for leniency when they break the law. If we do not challenge this kind of behaviour, we are condoning it and allowing it to continue,” he noted.
The class action is being jointly funded by Australia-based litigation funder CASL and New Zealand litigation funder LPF Group.
Commenting on the proceedings, CASL managing director Stuart Price said, “this is one of the most important class actions we have funded”.
“It goes to the heart of the huge power imbalance that exists between banks and their individual customers, who without litigation funding would simply not have the resources to pursue legal action against ANZ and ASB for their serious failings,” Mr Price said.
Mr Price hopes the class action could encourage better behaviour among Australasian banks.
“Extensive reviews into the culture and conduct of Australasian retail banks identified significant issues and a lack of accountability. We hope this class action will encourage better service and respect for all bank customers, deter future breaches and improve regulatory compliance.”
