Bankhawk Blog

During October, we have all been notified by our banks that the terms and conditions (Ts & Cs) of banking have changed. The changes were made to comply with the Payment Services Regulations (PSR). In case you did not notice it, the notification by your bank may have been just an advertisement in the newspapers – and such advertisements do not appear in the online versions of the newspapers.

It prompted me to read the terms and conditions of my bank. Not all banks use the same kind of arcane and legalistic language as my bank does, and in particular, the Ts & Cs of Ulster Bank are almost readable. The underlying Ts & Cs of all of the banks are, however, similar in most respects.

We had a discussion around the dinner table with a few friends. A lively discussion which killed a lot of myths – if we had created a quiz on the topic, no one would have got top marks.

Here are a few examples!

Question
I opened an account before it was common practice to issue formal terms and conditions, and I never subsequently signed any document agreeing to terms and conditions. Am I bound by them?
Answer
Here’s how the bank sees it:-“…. the Bank reserves the right at all times to introduce new Terms and Conditions and to vary or amend the existing Terms and Conditions by giving two months’ notice thereof to the Accountholder by whatever means the Bank, in its discretion deems appropriate,..”. It appears that a notice in a national newspaper, making reference to the banks website where the terms and conditions are published constitutes appropriate means, and this means was used in the most recent changes.

Question
Jack has a few banking issues not covered by the terms and conditions. What’s the position regarding those?
Answer
My bank’s Ts & Cs state in relation to those Ts & Cs themselves:- “They do not comprise an exhaustive list and fall to be read in conjunction with, and subject to, relevant banking law and practice.” So, in effect, any practice which prevails in banking could potentially be used as a defence by the bank if challenged.

Question
One of Jack’s issues concerned a post-dated cheque paid by the bank before the date shown. What rights has Jack?
Answer
Few if any, Jack! The Ts & Cs state “The Bank may pay a post-dated cheque if it is presented before its due date and no liability will rest with the Bank for so doing.”  So the concept of a post-dated cheque is rendered meaningless.
Supplementary Question
What if the cheque is out-of-date, i.e. it is more than 6-months old?
Answer
Here again, the bank has an escape clause. “If the date on a cheque presented on the Account is more than six months old, the Bank may, at its sole discretion and without contacting the Accountholder for further authority, allow such cheque to be paid.”

Question
Over a year ago, a situation arose, and was widely covered on discussion boards whereby in a credit transfer involving a large amount of money, the customer entered the wrong account number (but the correct name) – and the funds were transferred to the wrong recipient. The position was somewhat unclear, as account numbers were never formally recognised in Irish law.
Answer
The position is now quite clear, both in law in the Payment Services Regulations (PSR) and the Ts & Cs of the bank:- “The Accountholder agrees that any incoming payment to the Account made by either the Accountholder or a third party is determined solely on the basis of the Account Number and Sort Code accompanying the payment. Where the Account Number or Sort Code is incorrectly stated on a payment order by the Accountholder or a third party, the Bank shall have no liability for the non-execution or defective execution of the payment order to the Account.”  So the message is – be very careful when making out a lodgement or a credit transfer. For a lodgement, the best way is to use a pre-printed docket from the back of your cheque book.

Now for some more difficult ones
None of us around the table were lawyers, but we felt that we had made sense out of the clauses above, even if we did not like what we read. However, there were a number of terms and conditions which somewhat stumped us – even though we all felt that we had a reasonable grasp of the English language. Sentences like these should not appear in any document intended for use by consumers:-

“No time or indulgence which the Bank may extend to the Accountholder nor any waiver by the Bank of any breach of any term or condition of these Terms and Conditions shall affect the Bank’s rights and powers hereunder.”
Our best guess at what this means is:-
“if we (the bank) let you off the hook this time, do not take it for granted that we will do the same thing next time”
Can any reader give a better explanation?

Another difficult one!
“Each of the provisions of these Terms and Conditions is severable from the others and if at any time any one or more such provisions, not being of a fundamental nature, is or becomes illegal, invalid or unenforceable, the validity, legality and enforceability of the remaining provisions of these Terms and Conditions shall not in any way be affected or impaired.”
Does this say?
“If you puncture a hole in these Ts & Cs you have not busted the whole wheel”

And this one is more worrying!
“The Accountholder shall hold the Bank harmless from any loss or damage suffered by any person as a result of the Accountholder’s breach of any of these Terms and Conditions.”
Does this mean that if a third party were to sue the bank in relation to some occurrence which resulted from a breach by me of the Ts and Cs, then I must pay all costs incurred by the bank as a result – with no upper limit on such costs?

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