Accounts

Accounts.

The terms of an account between a customer and bank or other financial institution, is governed by contract law.  In practice, the bank will prescribe the terms and conditions for the account and the customer will have little choice but to accept them. The terms and conditions are usually be given to the customer on opening of the account. The document is commonly signed.  The terms and conditions may be incorporated by reference.

The terms and conditions may reserve the right for the bank to change the terms from time to time.  The extent to which this is possible will  be determined by the contractual terms.  It is unlikely that major substantive changes would be permissible. Fees and conditions may be separately outlined and provision may be reserved for change, from time to time. The fees and charges may be published on the website.

In the case of accounts between customers who are consumers, and banks, the account terms and conditions will be subject to the Unfair Contract Terms regulations.  In the case of consumers under the Consumer Protection Code, which includes many small businesses, the provisions of that code will be relevant.

Business Accounts terms and conditions.

Commonly, banks have general omnibus business terms and conditions.  They are potentially applicable to a wide range of accounts.  The appropriate terms and conditions applicable to each account are specified in the term.  This allow for flexibility and simplicity, in the common case, where the customer has a number of different types of accounts.

The bank in opening an account will require basic information of the customer. There will generally be a detailed application form, seeking requisite information. In the case of new customers, lenders must ensure compliance with statutory obligations in respect of money laundering and terrorist financing. This places significant obligations on lenders. See the separate sections on this topic. Banks may reserve the right not to open an account. They must not open an account if the statutory money laundering requirements cannot be completed.

The provisions of a Central Bank code applies to transfer of accounts to another institution.  The code operates to facilitate transfers of relevant direct debits, standing orders etc. from the old account to the new account. The objective is to promote competition by facilitate account switching between banks.

If the account does not provide for an overdraft, it will generally not be permitted.  The bank may permit an account to become overdrawn on a discretionary basis. It will usually reserve contractual rights to enforce and refuse payments. If an overdraft is permitted, contractually or by concession, it will generally be repayable in full, on demand.  If the demand is not met, the account may be closed and the debt enforced.  Payments and cheques may be refused.

The terms and conditions of the account will generally seek to put an onus on the customer to take care of all cheques, cards, pin numbers etc.  There will be obligations to report any loss, fraud and theft to the bank promptly. The customer may be liable for the consequences of failure to do so.

Cheques, books and cards etc. will usually be deemed the property of the bank.  They may be  required to be returned on demand.

The terms and conditions will provide for the issue of statement.  Their frequency may be specified.  It will generally be provided that the customer is obliged to review statements and immediately report any errors or omissions.  If an error is made, the bank will have the right to correct it without approval or notice.  It is likely to agree to notify the error.

A change in the customer’s basic details must be notified to the bank.  This may include, change in name, address, e-mail, contacts, etc.  The customer is likely to undertake to ensure that all e-mail access and passwords are secured.

The customer will be made liable for misuse of the account.  Third parties may not be authorised to operate the account, other than under agreed arrangements with the bank.

Lodgements

The terms and conditions for acceptance of lodgements will  be specified.  It will provide for acceptance of cash, cheques, money transfers and other items in the case of a current account.  There may be discretion to receive cheques made out in favour of third parties, subject to the customer indemnifying and compensating the bank for any loss.

Credits are typically made to the account on lodgement.  However, if the relevant instrument is not paid or is recalled by the paying bank, the bank will reserve the right to debit the account.  This will also apply to any later fraud, mistake etc. discovered on the operation of clearing rules.

Facilities may be offered for lodgement to a particular account.  There may be provision for physical lodgement of cheques in a branch.  Lodgements received may be held at the customer’s risk until processed.  There may be a promise to process within certain time, generally a working day.  The risk in relation to the discrepancies between lodgement slips and amounts in lodgement envelopes will be a customer’s risk.

Withdrawals

Withdrawals from the account are subject to the instructions given.  There will usually be a mandate authorising the persons who may sign the account.  There is commonly provision for a number of means of withdrawal, depending on the nature of the account.  This may include direct debit, standing order, cheques, personal withdrawal at branch  and card withdrawals. In the case of cards, withdrawals may be by way of debit card or credit card.  The terms of the card will itself be subject to terms and conditions, which are the subject of a separate contract.

If the available balance in an account is insufficient to make the payment, but if an overdraft is permitted, by agreement or concession, interest, referral fees and surcharges may be payable. Just because payment is made on one occasion, does not warrant or imply that it will be made on other occasions. The bank will reserve its rights.

Provision may be made for cancellation of direct debits and standing orders.  They will generally be effective, only when notified and provided that sufficient time is given. A direct debit or standing order may be cancelled if there are insufficient funds to pay it when due.

Cheques

Terms and conditions may be applicable to cheque books on a current account.  The onus is on the customer to ensure that the cheque is correctly drawn.  The customer will undertake to use all reasonable care in writing cheques and will undertake to prevent forgeries and alterations.  Alterations must usually be initialed.

The bank may reserve the right to pay post-dated cheques if they are presented before the due date.  They may reserve the discretion not to pay.  Provision will be made for stopping a cheque.  Certain instructions and notice will be required. There is an obligation to inform the bank of any theft, loss of a cheque book, a suspected forgery or fraud.

Payments

The customer may avail of the various payment services which the bank operates.  There may be terms and conditions applicable to different types of payment.  International payments services will be subject to more rigorous conditions.  Fees and charges applicable will be identified typically on a website.

In making payments, the onus will put on the customer to complete all forms accurately.  The bank may undertake to use reasonable steps to make payments in a timely manner in accordance with instructions.  However, it will be subject to receiving instructions by a certain cut-off point, and subject to other terms and conditions. The bank will be entitled to operate its security procedures in respect of payments, in order to ensure accuracy and to ensure that there is no fraud.

Special provisions may be made in respect of payments in other currencies.  Exchange rate and the basis of calculation will be specified. Special provisions will be made for same  day value payment services.  Generally the banks will wish to minimise its loss arising from international and same day value services.  It may seek to remove its liability, unless it is caused by its fraud, wilful default or negligence.

The bank will not take responsibility for indirect losses arising from failure to make payments on time, for whatsoever reason. Liability for consequential or indirect loss, including loss of profits and disruption to business contracts will be invariably excluded.

Joint Accounts

Special permissions may apply to joint accounts.  The terms and conditions of the mandate will be specified in the signing instructions which govern the account.  Joint accounts usually provide for joint and several liability for the balance owing on an overdraft. On the death of a joint bank holder, then the balance may be paid to the surviving joint holder subject to any statutory requirements which  apply at law. .

Special provision will be made for dealing with instructions on joint accounts. If the bank becomes aware of disputes between the account holders, it may close the account or amend its terms.  It may rely on existing instructions, until formally revoked.

If the joint account is that of a partnership, then it will usually be stated to continue, notwithstanding changes in the membership of the partnership.  This may apply in the absence of written notice to the contrary from all of the remaining partners or from executors of outgoing partners.

Fees and Charges

The charging of fees will be determined by the terms and conditions of the governing contract.  In the case of a business account, the applicable fees will typically be referred to as published from time to time by the bank.  They may be published by display in branches and on the  website. They may be notified to the customer by letter or other communication.

Provision will be made for debiting of fees on a periodic basis.  Where fees exceed certain sums, the business may be informed.  The account holder may be obliged to pay stamp duty and levies as arise from time to time, in connection with the account.  The Consumer Protection Code may apply to smaller businesses.

Interest

The mechanism for charging of interest will be specified.  Typically, the general terms and conditions may refer to a range of types of interest.  The interest rate applicable will be set out in the specified terms, applicable to the particular account.  The applicable interest rates may be set out in booklets and changed from time to time.  They may be published in the Internet and set out in the bank branch. Notification by letter or mail may also be given.

The Consumer Protection Code requirement apply to consumers and most businesses with a turnover of less than €3,000,000 annually. They may provision for notifications of changes to the consumer.

Deposit interest tax will be deducted at the prevailing rate, where applicable. A person who is not resident in Ireland and is resident in the EU or a tax treaty country, may be entitled to receive interest tax-free.  A declaration of compliance with certain requirements must be first made.

A bank may make provision for the set- off of deposit interest with interest on overdrawn balances.  An extra charge may apply where interest is set off  between an overdraft account and interest due on a deposit account.

Termination

There may be provision for closure of an account in circumstances such as the following:

• the account holder become a bankrupt or goes into liquidation;
• cessation of trade;
• inability to manage affairs in the bank’s opinion;
• death;
• failure to comply with legal provisions;
• representations or warranties becoming or being  untrue;
• breach of agreement.

The bank will give notice of closure of the account.

The customer may close the account by a written instruction.  If the account is overdrawn, the sums due must be immediately paid.

The Irish Bankers Federation Code of Practice on switching accounts will apply to moving  accounts.  This facilitates transfer of accounts between banks.

Boilerplate Clauses

The terms and conditions will generally contain template / standard type provisions.  This may include provisions providing that no waiver of the agreement will be effected simply by non-enforcement of particular terms at particular times.  If terms are unlawful, they will be severed.

There may be provisions dealing with breach of contract.  The bank’s liability may usually be limited if the breach arises by reason of circumstances beyond its control.

Express Data Protection act consents will be required in relation to the processing of personal information. There may be provision for disclosure of information to related bank entities including entities undertaking other financial services activities.

There may be provision for service of notice and deeming of notice to be good.  There may be provision for contact by e-mail and telephone.

The governing law will be usually Irish.

The bank may reserve the right to change the terms and conditions as required by market conditions, legal and other requirements.  The bank will undertake to notify alterations in advance.  The customer mayl be given the option to exit the contract.  Provision may be made for alteration of terms and conditions by notice in the branch or newspaper.  It may undertake to notify any prejudicial amendments in writing.