better banking

Spat over access to financial information

01 Dec 2016

Ms K was treasurer of a committee supervised by a trust.  There was a disagreement between trustees and committee members about whether the trustees were entitled to access financial information held by the committee.  One trustee, Mr T, approached the committee’s bank and requested statements and documents relating to committee accounts.  Mr T and an ex-trustee also expressed concern to the bank about the way the committee accounts were being operated.

In light of these concerns, the bank suspended operation of the committee’s accounts.  The bank also supplied Mr T and the ex-trustee with committee account information. 

As a result of the suspension, four committee cheques were dishonoured.  The committee found out about the suspension when a creditor advised it about the cheque dishonour. 

Ms K complained on behalf of the committee that the bank had acted wrongly in suspending the accounts and releasing information to non-signatories.  She also complained that the bank failed to immediately advise the committee of the suspension or give a proper explanation for it.

We reviewed the trust and committee governance documents which indicated that the trust, as supervisory body, was entitled to access to the committee’s financial information.  We also reviewed the bank’s terms and conditions, which stated that the bank could suspend an account if there was a dispute about account operations.  We were satisfied the bank could suspend the account in the circumstances.  Further, we considered the bank had subsequently provided the committee with a proper explanation for the suspension. 

The bank acknowledged a number of administrative failures:

  • it didn’t immediately advise the committee of its decision to freeze its accounts as required under the bank-customer contract and its own internal policy
  • it didn’t give a timely explanation of steps needed to be taken to lift the suspension  
  • it shouldn’t have provided information to the ex-trustee without first discussing the request with the committee.

The bank offered the committee $1,500 compensation to settle the complaint.  We thought this was reasonable in the circumstances.  The committee had been inconvenienced by the bank’s administrative failures, but the major cause of the situation was the dispute between the trust and the committee.

Ms K accepted the offer and the case was closed.