Banker-Customer Relationship
A fiduciary duty may arise either expressly or impliedly. Fiduciary relationship is based on trust, loyalty and confidentiality. A fiduciary should act in good faith, not making any secret profit, avoid conflict of interest and cannot act for her/hisor other party benefit without permission from her/hisprinciple.
- The world uses either the continental European model that defines specific cases in which a fiduciary relationship exists
(e.g.) https://www.law.ox.ac.uk/business-law-blog/blog/2018/08/fiduciary-principles-banking-law or - the Anglo-American model that states fiduciary relationship situations as exceptions
(e.g.) https://www.krcl.com/insights/do-banks-owe-their-borrowers-a-fiduciary-duty
In banking, debtor-creditor and bailor-bailee relationships are also possible.
Articles – Basel links for Fiduciary
https://www.bis.org/review/r140610c.pdf
https://www.bis.org/review/r101209e.pdf
https://www.bis.org/review/r180810d.pdf
Legal cases:
- Woods v Martins Bank
- West Building Society v Mathew
- Titan Steel Wheels Ltd v Royal Bank of Scotland
- Peekay v Australia and New Zealand Banking Group
- Cornish v Midland Bank
- Deutsche Bank v Chang
- Reserve Bank of India vs Jayantilal N. Mistry
Best Practice for a bank:
https://www.sc.com/jp-en/fiduciary-duty-policy/
GDPR & Customer data
Europe’s GDPR prohibits profiling and this impacts the automated processing of consumer data to identify and evaluate personal features. Banks use automation to deliver value-added services, such as credit scoring and expenditure evaluation. They need to ensure transparency such that they are able to establish that their decisions are based on a legitimate reasons. Under GDPR, customer can request a bank to justify the usage of automated decisions (e.g. loan refusal).
| Article 12 | Transparent information, communication and modalities for the exercise of the rights of the data subject |
| Article 13 | Information to be provided where personal data are collected from the data subject |
| Article 14 | Information to be provided where personal data have not been obtained from the data subject |
| Article 15 | Right of access by the data subject |
| Article 16 | Right to rectification |
| Article 17 | Right to erasure (‘right to be forgotten’) |
| Article 18 | Right to restriction of processing |
| Article 19 | Notification obligation regarding rectification or erasure of personal data or restriction of processing |
| Article 20 | Right to data portability |
| Article 21 | Right to object |
| Article 22 | Automated individual decision - making, including profiling |
| Article 23 | Restrictions |
Do you know what type of relationship you have with your bank? Do you know your risk exposure?
Kannan Subramanian R
March 2022