Bank’s duty of confidentiality is an implied term of contract between customers and their banks and building societies that these firms will keep their customers’ information confidential. This confidentiality is not just confined to account transactions – it extends to all the information that the bank has about the customer. But from time to time, banks end up releasing information that they should have kept secret about their customers to a third party which sometimes ends up in major consequences for the banks and their customers.
Bank’s duty of confidentiality has been eroded even before the September 11th attack, the 1924 case of TOURNIER V NATIONAL PROVINCIAL AND UNION BANK OF ENGLAND this is has shown that a banker’s duty of confidentiality is not absolute. The TOURNIER principles set out four areas where a bank can legally disclose information about its customer. These principles today are still in place and are:-
Where the bank is compelled by law to disclose the information.
If the bank has a public duty to disclose the information.
If the bank’s own interests require disclosure.
Where the customer has agreed to the information being disclosed.
If a bank discloses information about a customer in any circumstances other than those described above, then it has acted wrongly and should, as a general rule, be held liable for the reasonably foreseeable consequences of its action. . If a bank’s carelessness leads to a breach of confidentiality that does not reduce the fact that the bank acted in breach of a fundamental duty it owed to its customer.
Compulsion by Law
The first exception in TOURNIER permits the bank to disclose confidential information under compulsion of law. This may be either at common law or statute. The Committee on banking took the view that too many damages had been made by legislation into banking confidentiality, which give rise to the following legislation exceptions
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