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This article is focused on New Zealand law and explains issues from a Common law perspective.
Your rights in dealing with banks within New Zealand
New Zealand Banks are required to be registered and to belong to the New Zealand Bankers Association. The practice and standards for banking are set out in the Code of Banking Practice 1996, which is enforced by the Banking Ombudsman.
How do I make a complaint to the Banking Ombudsman? Visit the Banking Ombudsman complaints page.
What fees can banks charge?
The most common question people ask about their rights in relation to banks is whether banks are entitled to charge fees for the services they provide. Banks are businesses, and as such they are entitled to charge for services - these may include, but are not limited to, fees for deposits, withdrawals, automatic payments, direct debits, telebanking and the use of a cheque book.
Banks may also set a minimum balance that customers must have or set different fees in accordance with customers' balances.
Can a bank refuse to allow me to open an account with them?
You have no legal right to a bank account; it is therefore at a bank's discretion whether or not they allow you to open an account in your name. In general, however, this tends only to happen if you are under a certain age or perhaps if your funds do not meet a minimum balance required by the bank.
What information are banks required to give their customers?
When you open a bank account the bank is required to notify you of the terms and conditions of their service, including the associated fees. The bank should also provide you with any other information on your request.
Banks are required to notify existing customers if they change standard fees or if interest rates are to change.
In accordance with the Code of Banking Practice, banks must give you, on request, a copy of their current quarterly reports, which include key information such as balance sheets, credit ratings and capital adequacy.
Will the bank keep my records confidential?
It is a strict requirement of the Code of Banking Practice that the privacy laws contained in the PRIVACY ACT 1993 are applied to the banking industry. Banks must keep all information relating to present and former clients in the strictest confidence (see How to complain to the Privacy Commissioner ).
What losses will I be liable for as a customer?
You will be liable to the bank if you acted fraudulently, whether alone or jointly with another person.
You will also be held liable if a loss occurs because:
- you selected an unsuitable PIN or password - for example, one based on your birthday, sequential numbers (such as 1234), or parts of your phone number or your street address, or
- you disclosed your PIN or password to someone else, intentionally or negligently
What losses won't I be liable for as a customer?
You will not be responsible for any losses caused by the fraudulent or negligent conduct of the bank's employees or agents, nor for any faults that may have occurred with machines, cards or systems (unless some message or warning was given to you).
Similarly, you will not be held responsible for any unauthorised transaction that occurred before you were issued with a PIN number or password, nor if any other transaction occurred where it was clear that you did not contribute to the loss.
Inform your bank of any changes in your circumstances
You are under an obligation to notify your bank of any change in your address or occupation. You should also notify them as soon as possible if any card or cheque book is stolen; in this case, you should also advise the Police.
Closing an account
You may close your account at any time for any reason, subject to any relevant terms and conditions in contracts that you may have signed with your bank.
What if I have a complaint about the bank?
The bank is required to inform you of their procedure for dealing with complaints and to have booklets on display that deal with this. Banks are required under the Code of Banking Practice to provide customers with a free complaints procedure. If you have a complaint your first step should be to approach the bank and to use its internal complaints procedure; if you are not satisfied with the outcome of this procedure, you should complain to the Banking Ombudsman (see How to complain to the Banking Ombudsman ).
- If you have a complaint about the bank's services in relation to your use of your cheque account, you may also wish to consult a lawyer, who will be able to advise you of your rights and the possible remedies open to you.
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