The global banking industry has seen an increasing number of class actions being brought against it.
In August 2014 an application for class action certification was launched against a number of Australian banks in New South Wales. The class potentially consists of hundreds of thousands of bank customers who were allegedly charged excessive credit card fees for late payments.
Every customer of the named banks who was over-charged would automatically form part of the class unless they choose to opt-out. The period for the claims currently remains open-ended and a customer who was over-charged many years ago would also be entitled to relief.
Individually, class members would have suffered relatively small losses. Launching individual legal claims against the banks would prove too costly, fuelling the motivation for proceeding via class action.
But the cost of litigating class actions is high. Last year a US bank settled a class action for $55 million despite the bank alleging that it had not violated any laws. The case was about the order in which the bank posted debit card transactions to customer accounts, and the alleged effect the posting order had on the overdraft fees charged to account holders.
The South African banking industry has already been drawn into the class action arena. A recent case sought unsuccessfully to include claims of reckless lending against a number of banks. The class action was not certified on the basis that there was no triable cause of action.
The banking industry should be alert to the possibility of class actions. There is currently no existing legislation to guide the process but the courts have provided guidance.