Internal ANZ records and emails show that the bank knew as far back as 2006 that its exception fees were unjustified and had heightened its exposure to litigation and regulatory risks, the Federal Court was told yesterday.The first morning of trial hearings in the test case on whether ANZ unfairly penalised its customers on overdraws, late payments and dishonour transactions, was dominated by submissions from lead counsel for the plaintiffs, Michael Lee SC.Lee cited a string of ANZ documents, including minutes of management board meetings, emails between senior line managers and reports from special working groups, to construct arguments about the bank's motives for reducing exception fees in 2009.While the documents are yet to be tendered to the court, Lee told the hearing that a bank record from 2006 stated that the $45 dishonour fee on a MasterCard credit card product was hard to justify to customers and regulators.Lee cited the bank document as saying: "Existing differences with honour and dishonour fees levels are hard to justify. Changes may reduce the pressure on dishonour fees which are hardest to justify as no service is provided."The outcome of the trial is likely to hinge on whether the plaintiffs can show that ANZ levied its exception fees above the costs it incurred for handling late payments and dishonoured transactions.Lee cited other documents, which, he said, demonstrated that the bank's overhaul of its fee structures in 2009 was "a guise to continue charging exception fees"."It was a fiction of providing a fee for service," he told the court."They knew there was a real question of whether these (fees) were penalties."Lee presented evidence that even after the bank reduced its exception fees in 2009, it was still pursuing ways to "claw back" the lost revenue. He cited a statement made by a senior bank executive who acknowledged in 2008 that the fees had to be reduced to satisfy concerns raised by the Australian Securities and Investments Commission.But Lee told the court there was also evidence that showed the bank's board of management was considering "what was the highest fee we could charge when the changes came into effect."Other documents indicate the bank was under pressure from regulators and "bank buster type groups" to overhaul the fees. Moreover, ANZ executives had received internal legal advice that the bank may have an obligation to repay the fees it had collected from customers.The afternoon proceedings were mostly taken up with cross-examination of the lead plaintiff, Lucio Paciocco, by ANZ counsel Alan Archibald QC. Paciocco is a retail and business customer of the bank.The focus of Archibald's cross-examination was to show that the bank had made efforts to inform customers on ways to avoid incurring exception fees.In answers to questions from Archibald, Paciocco said he could not recall receiving information from the bank on how to avoid paying dishonour fees but said it was "likely". There were several contests on procedural matters relating to Paciocco's evidence in the course of which Justice Michelle Gordon restated the purpose of