Call­ing banks to ac­count


Auckland City Harbour News - - NEWS -

The bank law­suit of the cen- tury is on and New Zealan­ders like you are be­ing asked to sign up to it. But should you? Backed by Aus­tralian lit­i­ga­tion fun­ders, Auck­land lawyer An­drew Hooker hopes to prove in court that the $15 and $20 dis­hon­our fees charged to bank cus­tomers for not hav­ing the funds to hon­our a pay­ment or cheque, or for paying their credit card bills late, are il­le­gal.

It’s a big deal, as the dis­hon­our fees earn the big banks tens of mil­lions of dol­lars a year.

The ac­tion Hooker is plan­ning is what’s called a ‘‘rep­re­sen­ta­tive’’ ac­tion, where one named plain­tiff is used to take a test case.

It is called rep­re­sen­ta­tive be­cause that one named plain­tiff rep­re­sents the thou­sands of other peo­ple who have signed up to the le­gal ac­tion – more than 20,000 have reg­is­tered at fairplay on­ so far.

If the case suc­ceeds, the bank which charged the named plain­tiff the dis­hon­our fees will have to pay com­pen­sa­tion.

And be­cause it is a class ac­tion, all those the named plain­tiff rep­re­sented – all the other peo­ple who have signed up to the ac­tion – will have to be paid com­pen­sa­tion too.

But to make the ac­tion fi­nan­cially vi­able, in­clud­ing to cover prof­its hoped for by the lit­i­ga­tion fun­ders, enough peo­ple need to reg­is­ter so that a win yields more in com­pen­sa­tion than the $3.5 mil­lion es­ti­mated cost of tak­ing the case.

If too few sign up the fun­ders can pull out and it’s game over. So should you sign up? If you are the kind of per­son who man­ages money well and has never paid a dis­hon­our fee, then the an­swer

Don’t sign any­thing you don’t fully un­der­stand

Re­mem­ber, lawyers al­ways get paid first

The only fights worth join­ing are the ones you be­lieve in. is clearly ‘ Why would you bother?’ as you have noth­ing to gain.

For those who have racked up a few dis­hon­our fees, sign­ing up brings the pos­si­bil­ity of get­ting paid some por­tion of them back.

Just how much of each $15 or $20 dis­hon­our fee that a win would yield is un­known.

It de­pends on how many peo­ple sign up and how many dis­hon­our fees they have paid, and what por­tion judges de­cide was il­le­gal.

And any pay­ment to those sign­ing up will come af­ter the lit­i­ga­tion fun­ders get paid.

If you have paid a cou­ple of dis­hon­our fees, the sum that may one day, years from now, come to you, is not go­ing to be life-chang­ing.

For those who have paid mul­ti­ple dis­hon­our fees, sign­ing up will seem more at­trac­tive and Hooker says some poorer peo­ple have paid hun­dreds of dol­lars an­nu­ally for years.

But sign­ing up to a le­gal ac­tion of this scale is no small thing, and reg­is­ter­ing re­quires ac­cept­ing the terms of the lit­i­ga­tion fund­ing and le­gal ser­vices agree­ments that gov­ern the whole law­suit.

Usu­ally peo­ple don’t sign up to com­plex le­gal con­tracts by click­ing a but­ton on­line. Sen­si­bly so. Usu­ally com­plex con­tracts re­quire lawyers to ex­plain them.

Hooker says that those sign­ing up are in­dem­ni­fied by the lit­i­ga­tion fun­ders for any and all costs, even if the case fails. It’s a win-win. If the case suc­ceeds, you get money. If it fails, you pay noth­ing.

I’ve read the lit­i­ga­tion fund­ing doc­u­ment. It seems to say that. But peo­ple will have to de­cide for them­selves whether they are con­vinced that is so, and whether there is any per­sonal risk in help­ing en­sure the banks have to jus­tify their hor­rific, pover­tyex­ac­er­bat­ing fees in court.

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