better banking

Case - 48239

2016 - 2017

Bank accounts

Transactional account

After some difficult interactions Mr L was advised by his bank that it was no longer prepared to offer him banking services.  It wrote to him advising his accounts would be closed and a bank cheque for his funds balance would be posted to him.  Mr L told the bank he wanted cash not a bank cheque as he didn’t have another account to pay a cheque into.  However the bank maintained it could only pay him by bank cheque.  Mr L complained to our office about the payment method and the bank’s decision to close his account.    

A bank or customer can end the bank-customer relationship at any time for any reason.  A bank doesn’t need the customer’s permission to close their account nor does it need to continue doing business with a customer if it doesn’t want to.  The Code of Banking Practice provides that normally a bank won’t close an account until it has given the customer at least 14 days’ notice of this, but that in some circumstances, an account can be closed without notice.  Unless there are compelling reasons for immediate closure, we would expect a bank to give reasonable notice. 

In Mr L’s case the bank had given 14 days’ notice of the closure and we could find no wrongdoing by the bank in closing his accounts and advising him about this.  But we weren’t satisfied that the bank could stipulate that he could only be paid his funds as a bank cheque.  When we first contacted the bank it maintained it would only pay Mr L his funds by bank cheque, noting he had about $15,000 in the account and there was an inherent risk in a customer holding such a large amount of cash. 

We noted to the bank that the funds were Mr L’s and his request for cash was a request for legal tender.  While there may be an inherent risk in a customer having a large amount of cash, the funds were Mr L’s and he could direct how they be paid to him.  The bank accepted this and made arrangements for Mr L to collect his funds as cash.

We found that the bank ought to have made clear to Mr L from the outset that he could request cash and that his funds did not have to be paid to him by bank cheque.  Mr L had not needed the funds and so had not suffered any direct loss as result of the delay in obtaining them.  However, we considered the bank had caused him stress and inconvenience by maintaining he could only be paid by bank cheque which meant Mr L did not know how or when he would be able to get his funds.  We recommended the bank pay him $500 for this and both the bank and the customer accepted this, with the complaint being resolved on that basis.