Customers at one of Australia's largest banks ANZ won a partial victory Wednesday when a judge ruled that high penalties it imposed for late payments on credit cards were illegal.
Pedestrians walk past the entrance to the Australia and New Zealand Banking Group (ANZ) building in Sydney on October 29, 2013
But the Federal Court in Melbourne also found that other honour, dishonour, and over-limit fees on credit cards and deposit accounts which thousands of people challenged were reasonable.
An honour fee is levied when an informal overdraft facility is exceeded. A dishonour fee is charged when a regular payment to another account cannot go through for lack of funds.
Justice Michelle Gordon agreed with lead plaintiff Lucio Paciocco's argument that the bank illegally imposed penalties for late payments on credit cards that were "extravagant, exorbitant and unconscionable", and represented a breach of contract.
The court found ANZ's late fees of between Aus$20 to Aus$35 (US$17.78-31.12) exceeded its true costs of dealing with late payments -- ranging between 50 cents and Aus$5.50.
Andrew Watson, head of class actions for law firm Maurice Blackburn and representing 43,500 ANZ customers, said the decision would have implications for other banks involved in similar class actions.
He called it a "significant victory" and a "landmark for all Australian consumers".
"We're considering the ramifications of the decision, but we're talking at least tens of millions (of dollars)," he said of the potential payout that ANZ faces.
ANZ Australia chief executive Philip Chronican said he was pleased the other disputed fees were found to be reasonable, adding that it would be some time before the true costs of Wednesday's ruling were be known.
"The implications of today's decision for ANZ and its customers are still far from clear and it is likely to be some time until this matter is finally resolved," he said.
ANZ, the country's third largest bank, is the first of eight major banks to go to court as part of the case, which involves more than 185,000 customers who are trying to recover the "excessive" fees and claiming Aus$240 million in damages.
The other banks involved are BankSA, Bankwest, Citibank, Commonwealth Bank of Australia, National Australia Bank, St George and Westpac.