Fair Play on Fees, a group engaged in launching cases against banks to recover unfair penalties on behalf of registered customers, has proposed a legal action over unfair penalty fees against Westpac, ASB and Bank of New Zealand (BNZ).

The addition of these three new banks brings the total number of banks to face the court case to five. The other two include Australia and New Zealand Banking Group (ANZ) and Kiwibank.

Fair Play on Fees lawyer, Andrew Hooker, said it would lodge court documents against the three banks on 28 February 2014.

Since the launch of Fair Play on Fees, over 38,000 New Zealanders had signed up to the campaign, including 7,300 Westpac customers, 5,000 from BNZ and 6,000 ASB customers.

The penalty fees paid by customers include unarranged overdrafts (account out of order fees), rejected payments on deposit accounts, exceeding credit limit and late payment fees.

Hooker said the reason why it is important to launch these next three cases is that there are customers of these banks who have paid these penalty fees and wish to be represented in this legal action.

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"The research we have done suggests the penalty fees they have been paying are at a similar level to those other banks so these customers are entitled to have their fees back as much as Kiwibank and ANZ customers," Hooker added.