A bank’s duty of secrecy towards its customers and consequences in the case of breach

Abstract

This mini-dissertation concerns the obligation of banks in maintaining the affairs of its clients confidential and the consequences in case of breach of this duty. It is noteworthy to highlight that the relationship between the bank and its customer is based on a contract which is contested in nature and comprises of various legal duties and customs, including relevant banking practices and common law principles. The duty of secrecy or confidentiality of the bank towards its customers is arguably the essence of bank-customer relationship. Therefore, the bank owes its customer a duty of secrecy and the customer has a legitimate expectation towards the bank in ensuring that its affairs are kept confidential. There is a practical need for a bank to maintain secrecy regarding its customer and his affairs and thus the duty of secrecy may be justified by considerations of public policy. However, there are certain exceptions prescribed by the law when such duty of confidentiality does not apply. Besides these exceptions, there are also circumstances when a bank is requested to disclose certain information regarding its customer’s account to a third party.