The Banker and Customer Relationship
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INTRODUCTION
BANKER – CUSTOMER RELATIONSHIP
The banker and customer relationship has long been held to be based on a contract between two parties. It is a relationship where a person entrusts valuable items with another person with an intention that such items shall be retrieved on demand from the keeper by the person who so entrust. In other words, the relationship is of a contractual nature. This contract comes with certain responsibilities and duties which both parties must observe and breach of this duty, contract or negligence of responsibilities may create a legal issue with one side requesting for damages.
The major duties and responsibilities are highlighted in the outcome of the case of Joachimson v Swiss Bank Corporation (1921). The judge that presided over the case established various terms and duties of both the banker and the customer i.e. the duties which the bank owe the customer and vice versa. Meanwhile, the large part of the duties has to be taking care by the bank, because they are the one that is offering the major services. The customers only have few obligations and duty to carry out. Some of them are:
The customer owes the duty to inform the bank if he/she discovers that his/her signature has been forged in an attempt to withdraw money from his/her account.
Also, the customer will take reasonable care when writing cheques to avoid confusing the bank.
Moreover, the larger part of the duties rest with the bank offering the banking services to the customer. Some of the duties are:
The bank owes the duty to receive the customers deposits and collect cheques.
The bank owes the duty to comply with written orders or cheques issued by its customers assuming there is sufficient credit tin the account.
The bank owes the duty to repay the entire balance on the customers demand at the account holding branch during banking.
The bank owes the duty to give reasonable notice before closing a customers account if it is in credit.
The bank also owes the duty to act on its customers valid instructions and not on any forgery of those instructions
The bank owes the duty to advice the customer of known forgeries to his/her signature.
The most important duty out of all which the bank owes the customer is the duty of confidentiality.
THE DUTY OF CONFIDENTIALITY
Like I said earlier, the relationship between the bank and the customer is of a contractual nature and every bit of the contract terms must be observed. The contract includes the above listed duties but the key duty there is the duty of confidentiality and the bank must handle this duty with care.
The duty of confidentiality mandated the bank to keep any known information of the customer secret and safe. The duty is also called the duty of secrecy.
The duty of confidentiality of the banker to its customers is the soul of customer-banker relationship. It means to keep at least the information about the account transactions confidential and it includes the information has obtained by banker through an independent source due to its position as banker as such, and it extends beyond the termination of the contract as banker-customer. It first time recognized as a legal duty of banker by the appellate court in famous common law leading case of as previous to that the duty was being presumed as an moral duty of banker.
The duty is same as you would find in other professions like the medical professions where the doctor is not allowed to discourse a patient problems with someone else.
In Tourniers case with the National Provincial bank, the bank reveals Tourniers information to his employers and making him loose his job at end. Tournier complained that his bank had disclosed to his employers that he was not paying off his overdraft but had instead endorsed a cheque in his favour to a bookmaker. In consequence, his employers refused to renew his employment at the expiry of an agreement to employ him for three months. He brought a claim for: (i) slander; and (ii) breach of an implied contract that the bank would not disclose to third parties the state of his account or any transactions relating to it. He lost at first instance, but succeeded on appeal in obtaining an order for a new trial on the ground that the judge had misdirected the jury (Spearman, online).
The judge emphasizes that the bank owes an implied duty to its customer not to divulge information about its customers to third parties meanwhile there are exceptions.
Exceptions to the duty of confidentiality/secrecy
Although the judge ruled in favour of Tournier, he also provided other options in which the bank can be right in disclosing the customers information to the third party. The exceptions are explained below.
Divulging information which is in the interest of the bank
The judge in his ruling admits that the duty of confidentiality may not be considered if the banks interest is at stake and there are no reasonable options available. For example if a bank sue a customer or vice versa over an unpaid loans or over other charges, there wont be any other option for the bank to presents its case without rendering some of the customers information to either the court of another third party e.g. lawyer. So in this case, the bank is allowed to give