In Turner v The Royal Bank of Scotland plc, the court reviewed a bank’s duty of confidentiality to its customers where the bank replied to status enquiries.
The law on bank confidentiality is based on an old case Tournier v National Provincial and Union Bank of England. Tournier said that in general a bank owes a duty of confidence to its customers but there are four circumstances in which it is possible to override a bank's duty of confidentiality. They are where:
- the disclosure is by compulsion of law,
- the bank is under a duty to the public to disclose,
- the interests of the bank require disclosure, or
- the disclosure is made as a result of express or implied consent of the customer.
It is the question of implied consent that was considered in this recent case.
The bank, where Turner opened business and personal accounts in 1984, responded to a number of status enquiries in its standard coded terms, "appears to be fully committed at present".
Turner's express consent to the giving of references had not been sought and he commenced proceedings.
Evidence was heard that, at the time of the references being given, it was the standard practice of all banks not to seek customers’ consents. Additionally there was an internal bank memo produced which clearly indicated the lengths to which the bank was going to keep enquiries made of customers confidential from them.
Not surpisingly the court held that implied consent was not given in these circumstances. The practice of the banks constituted no more than a private agreement between them. Customers were entitled under Tournier to have their affairs kept confidential and banks could not privately agree otherwise. Therefore in view of the stringent ruling in this case, banks should be cautious in seeking to rely on the Tournier implied consent exception.
Banks should be aware that under the banking code there is now a requirement that where a bank reference is requested on a customer, the customer should give written consent before the reference is given. This should ensure that cases such as Turner do not happen in the future.
For further information please contact Gwen Griffiths, 7 Devonshire Square, Cutlers Gardens, London EC2M 4YH, UK, Tel: +44 171 655 1000
The information and opinions contained in this article are provided by Hammond Suddards. They should not be applied to any particular set of facts without appropriate legal or other professional advice.