Up to 500,000 people are expected to join a class action against local and foreign banks for repayment of dishonour and late fees. Official figures show the banks collected nearly $1.2 billion in such fees in the 2008 financial year. The money came from honour and dishonour fees on bank accounts, and over-limit and late fees on credit cards.

Financial Redress, a subsidiary of litigation funder IMF, is funding the litigation against 12 banks who it says have illegally charged well over $5 billion over the past six years. The case will be based on the claim that the fees are illegal because they amount to a penalty rather than a legitimate fee. Financial Redress managing director James Middleweek says the action will try to recoup as much of that $5 billion as possible, but it depends how many people make claims.

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