NAB denies fee refunds to SMEs are a response to class-action lawsuit threat

National Australia Bank says its decision to refund customers for late fees is not related to a separate class-action being organised against 12 of the country’s major financial institutions for unfair charges.

It comes as an estimated 70,000 individuals and small businesses have signed up for the class-action lawsuit against the banks, with SMEs being urged to continue signing up as there is no registration cost or fees if the case is lost.

NAB, one of the banks targeted by the class-action, has denied its latest decision to refund extra charges taken over the past eight years has any connection to the threat of the multi-million lawsuit.

Lisa Gray, NAB head of personal banking, told The Age about 16,000 overcharged customers were informed several months ago that refunds were to be given out. Additionally, she said the bank told ASIC in 2008 that a system error caused some personal banking customers to be charged an extra late fee.

SmartCompany contacted NAB for comment, but no reply was received before publication.

Maurice Blackburn chairman Bernard Murphy, who is overseeing the legal case against the banks, said in a statement it would be very difficult to interpret NAB’s reaction as anything but a response to the lawsuit threat.

He said it is puzzling NAB would choose to refund customers just days after the case was announced, and noted movements from other banks regarding funds.

“The NAB repayments are only one part of the story. Other banks are also changing their approach. For example, Citibank currently charges $30 for late payment on a credit card. It is now writing to consumers saying that on June 30 they will reduce this fee to $10, providing a reduction in bank fees of nearly 70%,” he said.

“The banks know that they have done the wrong thing, and are trying to put their affairs in order for the future by making these changes. However, if people want to recover past excessive bank fees paid they can only do so through the class actions.”

The class-action, which is being financed by IMF Australia, will seek to reimburse customers for so-called exception and overdraft fees. Maurice Blackburn intends to argue that while the cost to the banks was about $2 per charge, they were sometimes charging up to $60 in each case.

James Middleweek, head of IMF’s Perth subsidiary Financial Redress, says the amount of businesses signing up for the action has been totally unexpected with about 17,000 joining up so far.

“Because we have been so swamped we haven’t been able to do much analysis of the database, but from experience with other actions about 25% of the client base was small businesses.”

“However, it is important to note that these small businesses probably accounted for between 40-45% of the value of claims. The institutions tended to have bigger claims than individuals because of obvious reasons.”

Middleweek says the company expected the class-action to be popular, but did not anticipate the amount of businesses and entities signing up. However, he also notes there is absolutely no cost for joining, and the payment amounts will not be reduced if businesses continue to join.

“We did expect this to be popular, but I don’t think anyone quite knew it would become this big in terms of numbers,” he says.

“It has definitely touched a nerve. I think people have genuinely felt angry about this subject, and businesses have had a hard time with their banks over the past 18 months and may feel this is an opportunity to get some money back.”

SMEs and individuals are able to sign up for the class-action lawsuit by visiting the Financial Redress website.