Kiwi bank customers are being stung by significantly higher default fees than their Australian counterparts but some say banks across the Tasman are undercharging.

Figures released today show customers of Australian-owned ANZ, ASB, BNZ and Westpac are paying more than double what Australians pay for the same services.

For an unarranged overdraft Kiwis pay $10-15 - a free service for Australians at three of the banks, according to the figures released by three legal firms under the group Fair Play on Fees.

The group also gave transtasman fee comparisons for dishonoured cheques, unpaid bill payments, credit card late payment fees and credit card over-limit fees. They are largely more expensive for Kiwis.


ANZ, ASB, BNZ and Westpac confirmed the fees were accurate.

They declined to comment further on how their fees were set and why Kiwi customers were paying more.

The price comparisons comes after the Fair Play on Fees this week launched class action to claim back an alleged $1 billion of default bank fees charged to New Zealanders in the last six years.

But some say Australian banks are undercharging and New Zealand fees are fair.

"I would suggest that the Australians might have gone too far and are undercharging - they're not necessarily covering their costs," said senior lecturer at Massey University's Centre for Banking Studies Dr Claire Matthews.

Banks would struggle to cover costs for a dishonoured cheque at the Australian price of $6-8, she said.

"They (NZ fees) may not be perfect. They may be slightly over, some of them may be slightly under...but from a purely cost recovery perspective, some of those Australian fees do seem surprisingly low."

Auckland University Professor of Banking and Financial Institutions David Mayes said costs for services differed between countries so "a simple comparison of NZ and Australian fees will only work if the costs and range of subsidies are the same in both countries, which is unlikely".

But New Zealand lawyer Andrew Hooker, who is leading the legal action against the banks with two other legal firms, disagreed saying the cost to the bank is "just a few cents," when customers overdraw their accounts, pay their credit card late or bounce a cheque.

Customers were charged an average of $15 for each of the transactions, he said.

"There's no stopping them charging these fees in future if something isn't done. Kiwis will continue to pay too much."

Dr Matthews said there were no regulations around how bank fees were set.

"They are described as having to be reasonable but without any absolute definition of reasonable. Obviously what a banker thinks is reasonable tends to be a little bit different to what the customer who's paying them thinks is reasonable."

The lawsuit against New Zealand banks' default fees follows a similar legal battle across the Tasman, where several default fees have since been slashed.

Professor Mayes said it was important for the four major banks to be regularly challenged about their charges and efficiency.

"With only four of them and barriers to entry by other banks they have a prima facie opportunity to overcharge and make excess profits."

He suggested banks should voluntarily disclose information about their costs to show they were behaving in a socially responsible way.

Since the Fair Play on Fees legal action was launched this week, more than 16,000 Kiwis have registered to join the campaign.