Learning Objectives:

  • Understand the legal nature of the banker-customer relationship.

  • Identify the rights and duties of bankers and customers.

  • Apply legal principles to banking operations and disputes.

3.1 The Banker-Customer Relationship

The University of Chester module covers “the examination of common law accountabilities and the differentiation between contractual and non-contractual obligations for the practising banker or financial services provider” . The IHU course covers “the nature of the relationship between banker and customer” .

Key elements:

  • Contractual Relationship: The relationship is governed by contract law.

  • Bank’s Duties: Duty of secrecy, duty of reasonable care, duty to obey mandates.

  • Customer’s Duties: Duty to act in good faith, duty to notify of forgeries.

3.2 Rights and Duties of the Banker

The IHU course covers “different aspects of the contract between banker and customer” .

  • Right of Lien: The right to retain a customer’s assets until a debt is paid.

  • Right of Set-Off: The right to set off a customer’s debt against their credit balance.

  • Right to Charge Interest and Fees: The right to charge for services and lending as agreed.

3.3 Rights and Duties of the Customer

  • Right to Information: The right to receive clear and transparent information.

  • Right to Privacy: The right to have personal and financial information kept confidential.

  • Duty to Act in Good Faith: The duty to deal honestly with the bank.

  • Duty to Notify: The duty to notify the bank of any discrepancies or forgeries.

3.4 The Financial Ombudsman Service

The University of Chester module covers “the examination of best practice for complaints handling in a financial organisation and the role of the Financial Ombudsman Service” . The Financial Ombudsman Service provides an independent mechanism for resolving disputes between customers and financial institutions.

PreviousNext