Australian Bank Fees Targeted in Massive Class Action
Proposed suits highlight the role being played in the Australian class action market by IMF Ltd., a publicly traded litigation funding company that is basically bankrolling the bank suits
The American Lawyer, May 17, 2010
Sydney, Australia ; In what could be Australia’s biggest class action ever, some 40,000 people have signed on to litigation that challenges overdraft and late fees charged by a dozen of the country’s largest banks, the Sydney Morning Herald reports.
The Morning Herald reports that the litigation — actually a series of claims brought by Australian plaintiffs firm Maurice Blackburn — could eventually attract up to 100,000 people and businesses on the plaintiffs’ side. That would make it the largest class action in Australia’s history. Among the defendants: Australia and New Zealand Banking Group, Commonwealth Bank Group, National Australia Bank and Westpac Bank, as well as international banks like HSBC and Citibank.
In a statement announcing the suits, Maurice Blackburn Chairman Bernard Murphy accused the banks of charging late and overdraft fees to customers ranging from A$25 ($22) to A$60 ($54) when the true price of to the financial institutions of covering those costs was generally under A$2 ($1.8). Murphy said data from Australia’s banks had charged A$1.2 billion ($1.07 billion) in such fees in 2008 alone.
“Millions of Australians are out of pocket and deserve to be compensated for this overcharging,” Murphy said.
The proposed suits highlight the dominant role being played in the Australian class action market by IMF Ltd., a publicly traded litigation funding company that is basically bankrolling the bank suits.
Consumers, for example, are signing up for the bank-fee class action at the website of the Perth-based IMP subsidiary Financial Redress. Another sign of the funding outfit’s prominent role in the matter: a recent Morning Herald profile of the “The Bank Slayers” was not about the Maurice Blackburn lawyers but about James Middleweek, head of Financial Redress, and Hugh McLernon, CEO of IMF.
Though such litigation funding companies exist in the U.S., they have yet to make major inroads in big-ticket class action work, on either the defense of plaintiffs’ sides.
Unlike their U.S. counterparts, which can take 30 percent or more of a settlement or judgment, large Australian plaintiffs firms like Maurice Blackburn and publicly traded Slater & Gordon are not allowed to charge percentage contingent fees. The firms can only earn their normal hourly billings contingent on victory, though they can generally take a 25 percent increase on those billings as a “success fee.”
In Australia, by contrast, a company like IMF can take a cut of a settlement or judgment. And in the bank-fee litigation, such a cut could be substantial. Financial Redress estimates that Australians paid some A$5 billion ($4.5 billion) in unfair fees over the last six years.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.
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