Banking
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Essential Banking Law and Practice
Elisabeth Wentworth,* Special Counsel to the Ombudsman Banking and Financial Services Ombudsman Ltd
Introduction
This paper is not intended to be a summary of banking law and practice: that would be impossible in a relatively short paper and a one and a half hour seminar. It is intended, however, to provide: • an overview of the some of the characteristics of banks and their legal relationship with their customers; a summary of the regulatory framework within which they operate; and an outline of some of the legal issues that arise for consideration by lawyers advising banks or their customers.
•
•
A selection of useful texts and references for further reading and information is included in the Appendix.
What is banking law?
Banking law is not a discrete area of law like contract or torts. It conveniently describes, however, the collection of legal principles which impact on banking transactions and on the banker-customer relationship. In that sense, the activity of banking is the location at which a diverse range of legal principles intersect which we call banking law. Those legal principles are drawn from a range of sources, including common law, the Law Merchant, 1 equity and statute. In addition, for banks that subscribe to it, the Code of Banking Practice is a legally enforceable set of
* The opinions expressed are the author’s own, and are not intended as legal advice. Anyone needing such advice should seek assistance from a legal practitioner. 1 See below, p3.
principles and rules incorporated into the contract between the bank and its retail customers. Relevant legislation includes: • • • • Banking Act 1959 (Cth) Reserve Bank Act 1959 (Cth) Australian Prudential Regulation Authority Act 1998 (Cth) Australian Securities and Investments Commission Act 2001 (Cth), which contains in Division 2 the unconscionable conduct and consumer protection provisions in relation to financial services providers...
Elisabeth Wentworth,* Special Counsel to the Ombudsman Banking and Financial Services Ombudsman Ltd
Introduction
This paper is not intended to be a summary of banking law and practice: that would be impossible in a relatively short paper and a one and a half hour seminar. It is intended, however, to provide: • an overview of the some of the characteristics of banks and their legal relationship with their customers; a summary of the regulatory framework within which they operate; and an outline of some of the legal issues that arise for consideration by lawyers advising banks or their customers.
•
•
A selection of useful texts and references for further reading and information is included in the Appendix.
What is banking law?
Banking law is not a discrete area of law like contract or torts. It conveniently describes, however, the collection of legal principles which impact on banking transactions and on the banker-customer relationship. In that sense, the activity of banking is the location at which a diverse range of legal principles intersect which we call banking law. Those legal principles are drawn from a range of sources, including common law, the Law Merchant, 1 equity and statute. In addition, for banks that subscribe to it, the Code of Banking Practice is a legally enforceable set of
* The opinions expressed are the author’s own, and are not intended as legal advice. Anyone needing such advice should seek assistance from a legal practitioner. 1 See below, p3.
principles and rules incorporated into the contract between the bank and its retail customers. Relevant legislation includes: • • • • Banking Act 1959 (Cth) Reserve Bank Act 1959 (Cth) Australian Prudential Regulation Authority Act 1998 (Cth) Australian Securities and Investments Commission Act 2001 (Cth), which contains in Division 2 the unconscionable conduct and consumer protection provisions in relation to financial services providers...