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UPDATE 1-Australia's High Court backs ANZ in fee class action

Published 27/07/2016, 12:19 pm
© Reuters.  UPDATE 1-Australia's High Court backs ANZ in fee class action

(Adds comment from litigation funder IMF Bentham, shares)

SYDNEY, July 27 (Reuters) - Australia and New Zealand Banking Group ANZ.AX on Wednesday won an appeal against a six-year long court battle over allegedly unfair credit card charges, in a major blow to customers involved in Australia's biggest ever class action.

The High Court dismissed the case in which more than 185,000 Australians participated to redeem their money plus interest, according to Maurice Blackburn Lawyers, which first issued proceedings in the Federal Court of Australia in September 2010. The claim size was estimated at more than A$240 million ($179.69 million).

Customers have long complained of steep fees in Australia's highly concentrated banking sector, with four major lenders controlling about 80 percent of the market.

Similar class actions are pending against eight other lenders including No.1 National Australia Bank NAB.AX and second-biggest Commonwealth Bank CBA.AX , with ANZ seen as a test case.

Australian banks reaped A$4.3 billion in service fees from households in 2015, up 3.2 percent from a year ago, according to latest data from the Australian Bankers' Association Inc.

The class actions are being run on a no win, no fee basis. Litigation funder IMF Bentham IMF.AX was funding all the costs, for which it would receive its money back and a 25 percent share of any compensation received from clients who registered and accepted funding agreements.

IMF said it estimated the average impairment value and cost of provisioning for the ANZ and related cases to reduce its net profit for the current financial year by up to A$9.5 million.

"IMF is in the process of considering the judgment and its implications," it said in a statement to the stock exchange.

IMF shares slumped 5.3 percent in morning trades while the broader Australian market was up 0.3 percent. ANZ was a shade higher while other banks were down 0.1-0.4 percent.

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