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Two weeks ago, I made a publication on the article headlined Banker-Customer Relationship (Part 1). The article indeed receives needed attention from the public. This write up will be termed the continuation of Banker-Customer relationship. The reasons behind these write ups is obviously far beyond strengthening the relationship between bankers and their customers, but to as well enlighten some bank workers and customers on banking profession.
In this 21st century, people’s perspectives toward the banking franchises is really not encouraging at all. They no longer regard banking industries as prudential center. This is because, some customers, believe that Banker-Customer relationship only exists between the wealthy customers and the banks. Banking sector has sincerely been seen as Bankers for customers at the Surplus unit and not for customers at the deficit unit. Simply because, they feel customers from the deficit unit find difficulties in accessing loans from the bank, and mostly being denied of their responsibilities in the banking industries. This certainly is in contrary with people’s thoughts.
I actually see banking sector as the most important sector amongst others which I sincerely and willingly like to enlighten some customers and prospective customers of the Banks in order to prevent the sanctity of the noble profession which is unsightly from the customers’ view.
In my first publication on this topic, I analyzed with presided cases, the duties of bankers to its customers and ditto to that of customers to banks. Also, analyzed the foundation of Banker-Customer relationship.
Today, I plan to write in detail, the incidents that exist between Customers and the banking industries which as a result of that, customers are being deprived of their responsibilities. Amongst the duties of banks to its customers are, the duty to honor cheque on behalf of their customers (Primary duty), duty to give notice for closure of customers’ account, duty of confidentiality (Secrecy, which was discussed to an extent in the first publication), duty to accept deposits to various accounts, duty of care and the duty to advise customers on cleared and unclear aspects.
I will only discuss certain duties which are most relevant and complicated to customers in today’s banking industries. One is the duty of secrecy, it was decided in tournier’s case 1924, that the duties of bankers to its customers are qualified but not absolute. Four conditions were stated in clarifying the situation where bankers can disclose its customer’s information to third parties.
When it is done in the public interest
When it is in the best interest of the bank
Where it is under the compulsion of law and Where it is done by the implied or express consent of the customers.
The law gives virtue to bankers to disclose its customer’s information to third parties where any of the four conditions applies.
A banker will disclose its customer’s information to third parties where it is in the public interest to do so.
A banker will reveal its customers Information to third parties where it is done in the best interest of the bank. (A genuine reason must be stated when it’s in the best interest of the bank). A practical scenario of this is when a customer owes a bank some money which the customer fails to pay.
Under the compulsion of law, a bank has no choice than to reveal its customers account details to third parties. And this can either be done through receiving order (Bankruptcy proceeding), Garnishee order or order nishe and other proceedings that the Bank may deem appropriate.
When it’s in implied or express consent of the customer. See (Sunderland vs. Barclay bank 1938) in summary, Mrs. Sunderland sued Barclay bank for disclosing information on her account to her husband. Meanwhile, the bank claims that it is done in implied consent of the customer (Mrs. Sunderland), by giving her husband telephone call to continue conversation with the bank. The court therefore ruled in favor of the bank stating that the act was done in implied consent of the customer which obviously the bank can disclose her customer information to third parties without being liable of such.
Another Duty Bankers owe its customers is the duty of care. As there is an implied contract between banker and its customer, it is by conduct that the two parties owe themselves the duty of care, which can lead to court injunction once a party is default. The duty of care can be traced to Negligence action under the law of tort.
Negligence has been defined by so many Jurists, Bankers and Accountants. Negligence in its legal sense means a failure in law to do what a reasonable person would have done in the circumstances. To establish liability, a plaintiff must first establish that the defendant owed a duty of care towards the plaintiff, secondly, that the defendant has breached the duty, and thirdly, as a result of the duty been breached, the plaintiff suffered for damages. These three conditions already defined what the court will rule against the defaulting party. If a customer can satisfactorily prove these three conditions, such customer will succeed against the defaulting Banker. The only circumstance where these three conditions will not be necessary, is when the doctrine of “Res IPSA Loquitor” (Facts have spoken for itself) comes into play. The plaintiff will be free from proving the three conditions when the Court discovers that. The only exception to the law of Negligence is when the plaintiff contributed to its negligence (Contributory Negligence).
Contributory negligence means when both parties partake in the negligent act. If a plaintiff is found to have contributed by 100% of its injury, he will not succeed over the defendant. See (Pitts vs. Hunt, 1990). Also, if a plaintiff is found to have contributed by 40% to its injuries, the amount to be paid by the defendant will be reduced by 40%. See (Revill v Newbery [1996]).
The duty to give adequate notice to customers before closing his account: Closing of customer’s account happens, if the firm is unhappy with the way in which the customer is using the account, or feels that its relationship with the customer has broken down. So therefore, a bank must notify its customers before bringing the contract to an end.
This duty is very imperative and can lead to an action of suing the defaulting party. Irrespective of what ever happens, a bank does not have prerogative of closing its customer’s account without prior and subsequent notices.This is because, when customer’s account is closed without adequate notice, the banker has indirectly contradict the duty which he can be sued for damages and the customer will succeed against its banks. This act is obviously perpetrating in today’s banking sector. Sometimes, customers are not adequately informed before closure of their respective accounts which the act often causes a lot of damages on the customer. Banking industries should take a reasonable precaution against such incident so as not to be found guilty by court’s discretion.
– Saliu Ismail Oluwatosin, a writer, holds a professional membership with the Association of Accounting Technicians Scheme (West Africa); He writes from Lagos state, Nigeria.
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