Don't bank on it

Australia’s banks – they’re a group we love to hate.

Now there’s a class action about to be launched against local and foreign banks all because of fees.

At first glance you might think fair enough, they charge fees for everything - for depositing money into your account, for taking money out of your account, to open certain accounts, and to close others. There are fees to access information – about yourself, fees to get the banks to talk to each other, and even fees if you’ve had enough of their fees and want to move to another bank to try out its fees.

Fees are the thorn in the side of most banking customers – both personal and business.

But is a class action to recoup these fees the way to go?

I was listening to the news this afternoon, and I heard the reporter who’d just explained all about the class action telling Mr and Mrs Joe Average how they could jump on board and be part of the class action too.

Great, right? Bloody banks! Let’s stick it to ‘em! Everyone in Australia jump on board and try to get your fees back. Right?

Well…no.

I’m not for one second saying I like bank fees. Many are significantly higher than the actual cost recovery limit for the bank, so it’s hard for the banks to argue financial pressures. And we all grunt with disgust at their regular profit season announcements.

The problem I have with this is the class action is trying to recoup dishonour and late fees.

These are when you, the customer, do the wrong thing. They’re not just fees, they’re punishments or fines of sorts for you not playing by the banking rules.

Yes the banks collected a whopping $1.2 billion in these penalties in the 2008 financial year, but they wouldn’t have If customers had better managed their money.

Ironically, the class action is based on exactly this premise - that these monies ARE fines and penalties rather than actual fees.

So essentially the whole case revolves around a big group of people seeking to get back the money they paid in fines because they admit they ARE the fines they copped for breaking the rules.

What?!

Try that with a speeding fine:

Your honour – I am suing the state because I was caught speeding and was fined for such behaviour. Since it’s a fine and not a fee you should give it back to me, even though I admit to speeding in the first place despite knowing it’s wrong.

The law firms running the class action say there could be billions of dollars in compensation. A group called Financial Redress, a subsidiary of litigation funder IMF is running the class action, and in Australia Maurice Blackburn Lawyers are the solicitors handling it.

If you’ve broken the rules then step up and cop it on the chin!

Didn’t like the penalty? Well you won’t do it again will you?

Incidentally many of the big banks in Australia have scrapped or reduced these charges, so now its really a non-issue.

I bet plenty of these people were never smacked or grounded as kids. If they were, they’d understand that doing the wrong thing has consequences, not rewards, especially not to the tune of the estimated $5 billion compensation being mentioned in this case.