Tell ‘em they’re dreamin’: A rare loss for the banks

It’s a court case to make The Castle’s Darryl Kerrigan proud. ANZ (ASX: ANZ) customers have won the right to have their case heard in the Federal Court, after the High Court overruled a 2011 decision.

There was no sign of suburban solicitor Dennis Denuto, and no reports that ‘the vibe’ of the Constitution was invoked in the case (and no mention of the Mabo case, as far as we’re aware), but it’s a similar win – at least thus far – for consumers in the face of a larger business imposing significant fees and charges.

Lawyers for the 38,000 ANZ customers are suing for $50 million, arguing that the fees charged for overdrawing an account or paying credit card balances late are disproportionate compared to the costs incurred by ANZ.

The case, if successful, has implications for the rest of the Australian banking sector, including National Australia Bank (ASX: NAB), Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC), who are also defendants in a larger class action with the same basis.

Unsurprisingly, the banks are defending the case, arguing their fees and charges are legal and appropriate.

It’d be nice to think the law firm involved was doing it out of the kindness of their collective hearts. Unfortunately, the litigation funder is going to have its costs covered and receive 25% of any compensation received. No altruism there, I guess!

As to what customers should do with any winnings? You’d have to think the money should go straight to the pool room!

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Scott Phillips is an investment analyst with The Motley Fool .  The Motley Fool ’s purpose is to help the world invest, better.  Take Stock  is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

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