The Fair Play on Fees group has named Kiwibank as the second bank it will sue, on behalf of some of that bank's customers, over so-called exception fees.
The group, including Australian law firm Slater & Gordon, litigation funder Litigation Lending Services, and New Zealand lawyer Andrew Hooker, has already launched a case against ANZ, which ANZ is defending. It has also promised to take cases against ASB, BNZ and Westpac.
See all our stories on Fair Play on Fees here.
Kiwibank customers must register at www.fairplayonfees.co.nz by 11pm on Thursday, November 21, 2013 to ensure their inclusion in the case. Court documents will be lodged on Friday, November 22.
The lead plaintiffs for the case are Auckland couple Leanne and Sydney Briggs. The Briggs banked with Kiwibank for six-and-a-half years and in that time were "hit with" more than 100 default fees, totaling almost $2,000.
Leanne Briggs, described as "a busy working Mum" said she was regularly charged despite having transferred money to her account the day before to cover an automatic payment. "Technically Kiwibank said I was still overdrawn because the money didn’t go in until the following day because the payment went out that same morning. The default fees happened so often and I couldn’t do anything about it, no matter how many times I called."
Hooker said 6000 people had signed up for the claim against Kiwibank and he thought by the time proceedings were filed that number could be doubled.
He promised that people would "hardly have time to draw breath" before the next bank to be sued is named. He hoped proceedings could be filed against a third bank before Christmas.
The group alleges the following fees charged by banks over the last six years are unenforceable penalties which should be returned to participating customers:· Unarranged overdraft fees;· Dishonour fees;· Credit card late payment fees;· Credit card over limit fees. Fair Play on Fees stands to pocket 25% of any money it wins for bank customers.
Kiwibank had no initial comment to make.
Slater & Gordon's Ben Hardwick, said Kiwibank had been chosen next because “Kiwibank is just as bad as the other major banks when it comes to default fees”.
Hooker, asked if Kiwibank was perceived by customers as the "next worst offender" after the already named ANZ, said that proportionate to its customer base the percentage of Kiwibank’s clients that registered were the second largest, though they were not the largest or second largest by numbers.
"But the second reason why we chose Kiwibank was when people got to register with our website they had the opportunity to make comments and it became fairly obvious to us that from the comments that people were making who were registered with Kiwibank, who had banked with Kiwibank, were really annoyed that they had actually changed to support Kiwibank when it was established because they thought Kiwibank was going to save them from these fees
"And they were very angry to find out that Kiwibank was essentially as bad as the other banks in fee charging. So, it was both the number and the real unhappiness of their customers."
"...My clients who have contacted me, 6000 of them who have registered, a large amount of them are very sad that this bank that was established to take on the Australian banks seems to be mimicking what the Australian banks are doing."
This is the statement put out by Fair Play on Fees today:
Fair Play on Fees has today named Kiwibank as the next bank to face a class action over unfair penalty fees.
Kiwibank customers must register at www.fairplayonfees.co.nz by 11pm on Thursday, 21 November 2013 to ensure their inclusion in the case. Court documents will be lodged on Friday, November 22.
“Today is a positive step for the campaign. We now have a sufficient number of Kiwibank customers to take their complaint to court and fight to get their unlawful penalty fees back. We expect thousands more Kiwibank customers to join the campaign as a result of today’s announcement and encourage them to do so before the court documents are filed.
“We also encourage customers of all the remaining banks who have been affected by penalty fees to sign up to the Fair Play on Fees action. Today is also an opportunity for customers of all banks to take a stand against these unlawful fees.”
The High Court recently made orders requiring all ANZ/National Bank customers who wish to join the case to do so by 13 December. Court documents relating to that case were filed in June 2013.
The launch of Fair Play on Fees has seen more than 35,000 Kiwis sign up to date, of which over 6,000 are Kiwibank customers.
The lead plaintiffs for the case are Auckland couple Leanne and Sydney Briggs. The Briggs’ banked with Kiwibank for six and a half years and in that time were hit with more than 100 default fees, totaling almost $2,000.
Leanne Briggs, a busy working Mum, says she was regularly charged despite having transferred money to her account the day before to cover an automatic payment. “Technically Kiwibank said I was still overdrawn because the money didn’t go in until the following day because the payment went out that same morning. The default fees happened so often and I couldn’t do anything about it, no matter how many times I called.”
She was once charged $10 plus interest for being 2 cents overdrawn on a mortgage payment for a few days. Eventually, Leanne switched banks.
Hooker says a common theme among the Kiwibank complainants is that they had joined the bank because they were frustrated with the way they were being treated by their Australian owned bank. “These customers were then bitterly disappointed to find they were treated no differently by joining a Kiwi owned bank,” Hooker says.
The complainants will argue that the payment of penalty fees charged by Kiwibank over the past six years significantly outweigh the cost of facilitating the transactions. The penalty fees include unarranged overdrafts (account out of order fees), rejected payments on deposit accounts (dishonour fees), late payment and exceeding a credit limit on credit cards.
The team behind the case is New Zealand lawyer Andrew Hooker, Australian class action experts Slater & Gordon and litigation funder Litigation Lending Services. The litigation is structured to ensure claimants have no upfront costs and nothing to lose by joining the action. All legal services are provided on a no win, no fee basis.
New Zealanders can join the action against unfair bank fees by registering at: www.fairplayonfees.co.nz.
7 Comments
Any downsides or risks to signing up?
"Litigation Lending Services (NZ) will fund all the legal costs, in exchange for a right for them to be reimbursed if the claim succeeds along with 25% of the compensation."
So being cynical old me, if the compensation/recovery is less than these guys fees, you'd owe them the difference?
regards
With over 6000 of the 35000 signed up complaining about Kiwibank; one hopes the government is taking note. While it appears to be unpatriotic to knock Kiwibank the reality is that after ten years it hasn't returned any surplus to the country and NZ Post is anticipating throwing even more capital into it. I'm not sure what's been achieved by the bank. It's claims to have "changed" banking appear false in light of this suit and if it has changed market pricing through "competition" could the same effect have been achieved through regulation/tax at a lower cost to the country?
Do we really need Kiwibank?
Whilst it sounds like a nice idea, Kiwibank has made bugger all difference to the NZ banking market. But it has placed a ongoing drain on the Govt for more capital to be directed into a banking market that is already well accommodated for, rather than for other social services where that's not so much the case (schools, hospitals etc). And it's added additional risk to the taxpayer in having to support a minnow in the event of another crisis. Good idea, let's add an insurance company to it with under-priced premiums and have even more of the same. And having used both Kiwbank and others banks (and AMI) in recent years, only parochialism suggest that their practices and services levels are superior to the others as is now becoming increasingly obvious. Sell it now while it still has value rather than wait for a fire sale e.g the BNZ, when it's in strife and requiring substantially more taxpayers money to bail it out.
I disagree that it hasn't made any difference. Fees have come down, and service levels have improved, and the profits it makes stay in NZ. I am not sure if it is being run as well as it could be. They should be doing a lot better than they are, and it seems that the products offered these days are ppor compared to their competitiors. eg Their deposit rates suck compared to other providers. It doesn't seem they do the same sort of marketing these days.
Rob - they're being taking to court because of the size of their fees (in common with the other banks and admittedly yet to be proven whether they are inappropriate). They have a few fees cheaper but mostly cosmetic with the bulk no different to the Aussies. I hadn't noticed their deposit rates but frankly I'd want a higher rate than the others as my understanding is that Kiwibank isn't Govt guaranteed, and as investors/banks rightly found out in lending to an SOE in Solid Energy, losses on that investment should occur if the operators prove incapable of managing the business. I have less faith in an unproven performer tha others who have been operating through a multitude of business cycle over 100 or two years.
As for profits staying in NZ, I'm not sure of what return on investment the govt is getting on Kiwibank (I doubt it's at the levels that Kiwi investors in the others are getting) but if it's so good we do need to start owning other vital income earning assets - supermarkets makes heaps for example, there must be others, let get into them all...see my point where do you decide the Govt's role in the market starts and finishes ?
Kiwibank hasn't actually paid any dividend back to the government. So the only "return" is the value of Kiwibank when/if sold - assuming that someone will buy it. As for lowering fees/rates, could the same effect have been achieved at a lower cost through market competition, regulation, and/or tax?
"profits staying in NZ" is overstated.. The tax paid by employees of the aussie banks alone dwarfs the Kiwibank profits. The Kiwibank profits are reinvested in Kiwibank whereas the tax paid by the other banks (which I reckon could be more) and its employees goes to the Goverment. So we get the benefit of these taxes but not the benefit of Kiwibanks profits.
Kiwibank's spin about being different and revolutionary. Is just maketing. This is reinforced by the number of complainants in the law suit.. Kiwibank is a savings and loan bank wrapped in a fern which makes it hard to discuss rationally for many..
When Kiwibank credit rating falls to its natural level (it's diluting NZ Post down by the day) and starts paying for its "branches" at full cost it'll be interesting to see how long Kiwibank can maintain it's rates.... bever mind its profits.
Kiwibank hasn't actually paid any dividend back to the government. So the only "return" is the value of Kiwibank when/if sold - assuming that someone will buy it. As for lowering fees/rates, could the same effect have been achieved at a lower cost through market competition, regulation, and/or tax?
"profits staying in NZ" is overstated.. The tax paid by employees of the aussie banks alone dwarfs the Kiwibank profits. The Kiwibank profits are reinvested in Kiwibank whereas the tax paid by the other banks (which I reckon could be more) and its employees goes to the Goverment. So we get the benefit of these taxes but not the benefit of Kiwibanks profits.
Kiwibank's spin about being different and revolutionary. Is just maketing. This is reinforced by the number of complainants in the law suit.. Kiwibank is a savings and loan bank wrapped in a fern which makes it hard to discuss rationally for many..
When Kiwibank credit rating falls to its natural level (it's diluting NZ Post down by the day) and starts paying for its "branches" at full cost it'll be interesting to see how long Kiwibank can maintain it's rates.... bever mind its profits.
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