The ANZ Bank faces a huge payout after a class action by its customers secured a partial but significant victory in a multi-million dollar legal battle against its credit card late payment fees.

In a landmark legal decision in the Federal Court last Wednesday, it was determined that the bank had been illegally imposing penalties for late payments on credit cards.

The class action coincided with a campaign by consumer advocacy group Choice to have fees brought into line with the real costs to the banks. The bank might charge a late payment fee of $45 even if the late payment costs the bank as little as $5. 

Choice chief executive Alan Kirkland says charging excessive fees — otherwise known as price gouging — is 'a draconian measure that disproportionally impacts some of the most vulnerable consumers in our community'. He told the Financial Review: 'Fees should be an accurate reflection of the costs faced by businesses when customers are unable to make payments on time. It's not the role of a business to punish customers.'

A 45-year-old labourer who participated in the class action told AAP that a late payment of wages from an employer or a computer glitch that was the bank's fault would delay payment of his credit card bill for a couple of days. 'When you are struggling to get by each week with wages to pay your bills, another $40 to $50 out of payments puts you behind the next month.'

The class action sends a clear signal to banks — and other service providers such as Telstra and Optus — that they cannot exploit their relationship with customers without legal foundation. 

Such exploitation — whether it is illegal, or simply unethical — is closely related to the practice of usury, which refers to lending money at an exorbitant rate of interest. Usurers have been taking advantage of vulnerable people since ancient times. 

The most notorious contemporary example has been 'pay day loans', which can charge interest of 1000 per cent or more. They were partially banned in March last year but remain a problem. Many single parent families or people who have lost their jobs feel they have no choice but to go to these predatory lenders because they cannot pay rent or utilities and sometimes they cannot even afford sufficient food. 

Last month, Pope Francis described usury as a 'dramatic social evil'. 'When a family has nothing to eat, because it has to make payments to usurers, this is not Christian, it is not human! This dramatic scourge in our society harms the inviolable dignity of the human person.'

Australia is fortunate to have regulation in place to protect consumers from predatory business practices. But it's not all good news. The Federal Government came to office promising to lessen the burden of regulation to make it easier for businesses to function. That may help the economy, but it also assists unscrupulous corporations and individuals to exploit consumers.

An example is its likely imminent winding back of the hard won Future of Financial Advice reforms that were about to take effect. This will legalise deceptive conduct by financial planners and banks that provide clients with non-objective financial advice giving the best financial return to them rather than the client (e.g. commissions).

We've seen with the case against ANZ that laws can protect ordinary people against exploitation by unscrupulous corporations and individuals. We need to have them strengthened rather than weakened.

Michael Mullins is editor of Eureka Street.