Banks face penalty fee class action

The big four banks - ANZ, NAB, Westpac and the Commonwealth, along with eight other financial institutions, are targets of a class action law suit over penalty fees.

Litigation funder IMF Australia says penalty fees of up to $60 charged by banks when customers overdraw accounts, make late credit card payments or exceed agreed account limits are unfair and excessive. 

The Reserve Bank of Australia has reported that banks charged exception fees of about $1.2 billion in 2008/09.

Last year, National Australia Bank and Westpac axed some of their exception fees. Commonwealth Bank of Australia cited reductions in penalty fees for softer other-banking income in its quarterly report.