Topic: legal duty of the banker? 2000 words outline:1 The Duty of SecrecyExtent of the duty: Tournier v National Provincial and Union Bank of England [1924] 1 KB 461. Note four exceptions: per Bankes...

Legal Duty of Banker
In a commercialized world that exists today, one cannot expect to ca
y on day to day activity
without involving banks as a facilitator of transactions. Consequently, people are bound to
ecome customers of bank and share most important information and financial details with the
ank. The information shared are very confidential for the customers, and they do so in order to
avail benefits of services provided the bank like financing, making deposits etc. thus the banker
are in a position to get many confidential information of the customers. The record of
transactions made by customers is kept by the bank and it makes the relationship very
confidential and private. As a result, bankers are liable to adhere to certain duties towards the
customers.
The main duty that arises and is expected of the bankers is to maintain the secret and private
information as confidential. This duty is implied when a banker enters into contract with the
customer that it is the duty of the banker to not to share any information related to the account
until and unless there is a customer expression or implied consent of the customer. The
information sharing that may lead to
each of contract can be in the form of sharing bank
alance information, transaction details, securities mortgage, credit record or any other details
that the banker may acquire due to relationship with the customer. These can be tried under
provisions of fraud conducted on the part of the banker.
The most important question arises is that “why the secrecy of customer needs to be
maintained?” this is very much required because if any financial information is made public, it
can be misused by any third parties having vested interest in the customer’s personal life. It can
not only have adverse impact on the reputation of the customer but also lead to competitor
disadvantage and losses. It can also impact the credit worthiness of the individual in the market.
Though there are legal obligations of bankers to maintain secrecy, it has certain limitations and
can be over ruled by law and for better good of the public in general. With globalization taking
centre stage and transnational movement of funds becoming a day to day activity, the accounts
have become vulnerable to money laundering and funding of te
orist activities. Apart from
these, the limitation arises when the banks have personal interests at stake.
Before we move into the details of the Privacy Act, 1988, it is important that we take a
ief note
of the case Tournier v. National Provincial & Union Bank of England [1924]. The judgment of
this case lays the foundation for duties that is expected of bankers for their customers.
Tournier v. National Provincial & Union Bank of England [1924] – Case and Analysis
This case has been considered as a landmark in formulating legal framework for the banker that
the confidentiality or secrecy is implicit on the banker towards the customers.
In this case the Plaintiff (Mr. Tournier) was a customer of the defendant (National Provincial &
Union Bank of England). The plaintiff had overdrawn the accounts and had agreed to pay the
amount in installments every week. However, the plaintiff did not make the payments after initial
installment. The manager of the defendant bank called the employer of the plaintiff Kenyon &
Co. to get his residential address. In the conversation with the company, the manager of the
defendant bank also shared details about the plaintiff that he has endorsed cheques to bookmaker
and have been heavily involved into betting. Knowing this information, Kenyon & Co. refused to
enew the contract of plaintiff after the service contract ended in three months. Thus, a suit was
filed by the plaintiff against the defendant bank that there was
each of contract on the part of
defendant by sharing information to the third party.
In the landmark judgment, the majority held that the defendant bank...