The Finance Sector Union is concerned that the planned class action against bank fees would lead to job losses once it has proven its case successfully, that could compel affected banks to recoup their losses by resorting to large-scale employee separations.

The class action is alleging that about $5 billion were illegally collected from Australians over a six-year period and while Finance Sector Union representative Leon Carter is convinced that the lawsuit will draw attention to the issue it may also bring with it negative implications.

He said that the union is looking into the possibility that the problem may be solved by better regulation over the long haul.

Bernard Murphy from Maurice Blackburn Lawyers is adamant though that the lawsuit is justified when about 500,000 Australians are batting for the class action against local and foreign banks for refund and compensation of dishonour and late fees.

He said that they have a strong case and "whether it will be successful, that's a matter probably for the High Court."

International Monetary Fund (IMF) subsidiary, Financial Redress, is funding the litigation against 12 banks on the argument that the fees are simply bank-imposed penalties which made them illegal as managing director James Middleweek revealed that the class action is targeting to recoup up to $5 billion.

He said that the exact amount will be determined by the number of people making claims and "realistically if we got 300,000, 400,000 people to sign up over the course of the next few weeks and months we'd have a sort of 600, 700, 800 million [dollar] class action."

Mr Murphy said that the case will stand on the strength of contract law and the argument that penalty fees exceeded the banking cost in processing late payments and bank cheques.

He said that under normal circumstances banks are entitled to impose charges on overdrawn accounts such as credit card late payments or underfunded cheques and these charges hovered around several cents for credit cards and up to $2 for cheques.

Mr Murphy said that it turned out that banks have been charging $25 to $60 "which is downright extravagant and exorbitant and can be categorised as penalty and therefore illegal."

He said that the total claims could be very substantial as the central bank estimated in 2008 alone that these exception fees could have amassed $1.2 billion, leading to its current estimated claim value in the order of $5 billion.

Banks are now anticipating the backlash regarding the fees as the National Australia Bank (NAB) had recently junked such fees which cost the company up to $100 million, but NAB chief executive Cameron Clyne stressed that 'this is a first step, a small step in rebuilding our reputation which we've called out as a strategic issue and this generates one in two of all the complaints the bank receives so we think it's a pretty good place to start."

Consumer group Choice is optimistic that the class action would generate sufficient public interests as Choice spokesman Christopher Zinn believed that the public is demanding for remedy on the issue.

He said they had feedbacks that people are even writing to their respective banks asking "what are you doing charging us these very high fees for what are often fairly mundane breaches, [like] being a bit late paying a credit card transaction?"