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Banker/Customer Relationship

Justin Curcio discusses the duty of confidentiality in the relationship between banker and customer. This traces the root of the duty of confidentiality to the law of contract, as discussed in the landmark case of Tournier v National Provincial and Union Bank of England. The author compares the duty in England with the duty in the United States, and highlights the influence the decision of Tournier has had cross-jurisdiction.



I have no doubt that it is an implied term of a banker's contract with his customer that the banker shall not disclose the account, or transactions relating thereto, of his customer except in certain circumstances.

                                                                        -Sir Thomas Scrutton, L.J.


People seek to become a customer of a bank because of the reputation it has in the community. Banks are held to a higher standard than the average moneylender because of the responsibility it takes on and rights bestowed to it by the government.[1] A customer’s relationship with a bank is more than just opening an account. It may involve insurance, loans, retirement or a number of other financial transactions. Accordingly, a bank has a certain reputation in the community of trust and confidence, which the public can readily distinguish from a common moneylender.[2] This public recognition is one of the fundamental characteristics of what makes a bank a bank.[3] Due to this public reputation, a bank is bestowed with rights, obligations and duties towards its customers that are not required of other establishments.

A bank has a reputation in the community as a secure financial institution, and as such, has certain duties towards its customers.[4] One of the utmost duties is that of confidentiality.[5] Furthermore, this duty of confidentiality owed by the bank does not dissolve once an individual ceases to be a customer.[6]

These principles of the banker/customer relationship have been embodied in the Court of Appeal’s decision in Tournier v National Provincial and Union Bank of England.[7] In this case, Tournier’s bank contacted his employer seeking an address.[8] The bank then unnecessarily informed Tournier’s employer that he was in debt to the bank and was sending money to a bookmaker.[9] Due to this information, Tournier’s employment contract was not renewed.[10] The Court held that a bank has a qualified legal duty to not disclose such personal information.[11] This duty of confidentiality arose out of contract.[12] The Court of Appeal reached this conclusion by looking at the custom and practice of banking, which supported the belief that the bank did owe its customers a duty of confidentiality.[13]

However, a bank’s duty of confidentiality is not absolute.[14] A bank may disclose otherwise confidential information if compelled by law, if a public duty arises, in circumstances in the interests of the bank or if the client gives consent.[15] In Shah v. HSBC Private Bank (UK) Ltd[16], the Court acknowledged that HSBC had a duty to its customer but it also had a legal duty to not be involved or assist in money laundering. A bank is required to report a customer if it believes that customer is involved in money laundering. Accordingly, HSBC reported Shah to the Serious Organised Crime Agency (“SOCA”) because of its suspicion of Shah being involved in money laundering.[17] Additionally, HSBC was required by law to freeze Shah’s assets and not “tip [him] off” about SOCA’s investigation.[18] HSBC did not follow through with Shah’s request to transfer funds and provided no reason for its inaction.[19] The Court held that when a legal obligation of a bank arises, the bank owes no duty to its customers to disclose information about their account, when such disclosure may violate a legal duty of that bank.[20]


United State’s Banker/Customer Relationship

The United States’ banker/customer relationship is similar to that of the United Kingdom. The relationship is also considered to be one rooted in contract, thus is constructed on the law for the state that has jurisdiction in the matter.[21] Even though the relationship is defined on a state-by-state basis, the general principles of the banker/customer relationship are universal throughout the country.[22] United States’ courts and scholars frequently refer to Tournier as the quintessential case on the issue.[23]

Similar to Tournier, United States’ courts have recognized that there is a duty of confidentiality between the banker/customer.[24] Furthermore, this duty of confidentially is qualified and a bank can disclose otherwise confidential information if the customer gives consent (which may be implied), is required by law or if circumstances give rise to a public duty to disclose.[25] In the United States, there is not necessarily a fiduciary duty between the banker/customer, but one may be established when the banker/customer relationship compels the customer to act comfortably and disclose information he would not ordinarily disclose.[26] For example, in Dolton v. Capitol Federal Savings and Loan Association[27], Dolton wished to purchase property from seller. He informed his bank that the seller orally agreed to sell the land in return for installment payments.[28] Dolton’s bank then went out and paid cash for the land from seller at less than the asking price.[29] The court held that this could be considered a breach of fiduciary duty because Dolton entrusted the bank with personal information that it used for personal gain.[30] The United States recognizes the banker’s duty to be one of confidentiality between it and the customer. Moreover, that duty of confidentiality may evolve into a fiduciary duty if the customer reasonably entrusts the bank with additional personal information.


Once an individual becomes a customer of a bank, the bank owes that customer a duty of confidentiality. This is in part because a bank holds itself out in the community as a reputable institution that is entrusted with the financial securities of its customers. A bank does far more than just keep money safe. A bank can secure investments, loans, give commercial advice and provide various other fiscal services to the community. Banks have a higher standard of care than other (non-banking) lenders; in return, the government bestows to them certain privileges—granting banks statute protections and rights.

The landmark case of Tournier helps define what that standard of care and relationship is between a bank and its customers. The relationship is one that gives rises to a duty of confidentiality, which can only be breached in certain situations. When understanding the relationship between the banker and customer, the reasoning and holding in Tournier are not only recognized in the United Kingdom, but also looked to for guidance throughout the world. This precedent setting 1924 case changed the banking industry on a global level; defining and strengthening the banker/customer relationship.

[1] United Dominions Trust Ltd. v. Kirkwood, 1966 2Q.B. 431.

[2] ibid. 456.

[3] ibid.

[4] Tournier v National Provincial and Union Bank of England, 1924 1KB 461. Tournier is a precedent setting case that established the basic fundamentals of what a banker/customer relationship is.

[5] ibid., 473.

[6] ibid.

[7] ibid., 461.

[8] ibid., 462.

[9] ibid.

[10] ibid.

[11] ibid.

[12] ibid., 471–72.

[13] ibid., 461.

[14] ibid., 471–72.

[15] ibid.

[16] [2012] EWHC 1283 (QB). A bank owes a duty to the customer to follow his or her mandate.

[17] ibid.

[18] ibid., para. 32.

[19] ibid., para. 15.

[20] ibid., para. 238–39.

[21] See Indiana National Bank v. Earl Chapman, 482 N.E.2d 474, 482 (Ind. 2d 1985).

[22] Huhs, Roy E., “To Disclose or Not to Disclose Customer Records,” 108 Banking L.J. 30 (1991).

[23] ibid. 31., see Northern Trust Co. v. Peters, 69 f.3d 123, 130–31 (11th cir. 1995).

[24] Peterson v.  Idaho First National Bank, 83 Idaho 578, 586 (Idaho S.Ct. 1961).

[25] ibid. 588

[26] Dolton v. Capitol Federal Sav. And Loan Ass’n, 642 P.2d 21, 23 (Co. Div. II 1981).

[27] ibid. 22.

[28] ibid.

[29] ibid.

[30] ibid. 24. Case was remanded for factual consideration

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