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4. Bank’s Duty Owned to the Customers
4.1. Confidentiality
Eighty years ago, the common law established the principles of the bank’s duty of secrecy in Tournier v National Provincial and Union Bank of England. This duty of secrecy covers all information which the bank has acquired about the customer in the course of its duties, and subjects to four exceptional circumstances: (1) where disclosure is under compulsion by law; (2) where there is a duty to the public to disclosure; (3) where the interest of the bank require disclosure; (4) where the disclosure is made with the express or implied consent of the customer. Jack Committee recognized that the principle of confidentiality lay on the heart of bank-customer relationship and warned that the uncertainty of the extent of its application in modern banking service would lead to the danger of loss of customer confidence in the banking system. Although its recommendation to codify the principle by statute law was rejected by the government, the Banking Code followed its opinion and detailed the third exception, and also made clear the extent of disclosure for bank’s reference and credit reference agencies. It promises to treat all the customer’s personal information as private and confidential even he is no longer the customer. It uses the plain English and makes the bank’s duty more transparent to customers.
Likewise, the personal deposit information held by the bank had been the top secrecy in China. The Law of Commercial Banks reemphasis it : ‘commercial banks shall have the right to refuse to answer the inquiries into and to refuse to freeze, deduct or transfer an individual''s savings deposits - as made or requested by any unit or individual, except where otherwise provided for by law.’ Traditionally, customers often liked to use false name to open bank accounts to make the information more secret. As the passbook was the only evidence to prove the customer’s relationship with his bank, and therefore to hold a passbook meant to hold the money in it. Without detailed information of passbook, the customer’s deposit could not be accessible, many court’s judgments could not be enforced effectively, even if in many divorce cases. Finally, a regulation of ‘Stipulation for Using Genuine Name in Personal Deposit Accounts’ was issued in March 2000. Even so, the personal deposit information is proving to be difficult to access, because the identity information is merely held by a branch where the account is opened, and even if within the same bank group, this information is not be shared. Thus, in China, the problem seems like how to access the personal top secrecy where it is under the compulsion by law. The Turnier’s second exception is merged into the first one under the Chinese legal system. Infringement of the public interest is usually as same as breaching the law. The third exception is theoretically practicable in China. Under the Law of Contract, the contract is indeed agreed by the bank’s headquarter rather than a mere branch. The bank could treat that information as the group’s information but this is not the reality due to the protection of localism. The fourth exception is only applied to express consent under the contract law.
4.2. Duties of Care on Paying Banks
Speaking generally, the different duties of care rely on different contractual relationships. ‘While the basic relationship is thus one of debtor and creditor, a relationship of principal and agent coexists with it, for purpose of a customer’s instructions to his banker to carry out particular transactions on his consent.’ In Jack Committee’s opinion, the common law and statute were adequately to meet the requirement of duties of care imposed on banks. The principle is that there exists an implied term in the contract that the bank shall carry out the service with reasonable care and skills owned to the customers. The ground of duties appears not to be uniform, resulting from particular cases involving particular circumstances. The scope of an implied contractual duty of care has arisen principally in the context of (1) the execution of payment instructions, (2) the giving of advice and (3) the taking and realizing of security. The duty of care arising in contract may also arise in tort relating to bank’s negligence. Having regard to the separate management of Chinese banking, the comparability should be involved in the bank’s execution of payment instructions, so the essay now is focusing on the paying bank’s duty in respect of cheques.
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