Fiduciary In Banking

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Yes banks owe a duty to care and fiduciary to its customers. The bank is used strictly to refer to the corporate body while the term banker may mean both the institution and the individuals that work within the corporation. The relationship between a banker and a customer depends on the activities, products or services provided by the bank to its customers. Thus the relationship between a banker and its customers is a transactional relationship. Bank’s business depends much on the strong bond with its customers. “Trust” plays an important role in building healthy relationship between a banker and customer. Dr H.L Hart, in the book, Law of Banking defines a bank/banker. Definition of Fiduciary A person having a duty, created by his undertaking,…show more content…
 A fiduciary duty arises expressly by contract when the parties specifically agree to a relationship, such as the attorney/client or agent/principal relationship, that is considered to be a fiduciary relationship.  A fiduciary duties may also be implied in law, regardless of whether contractual relations or formal writings exist or a statute imposes such a duty, when one party relies on another to act on the party’s behalf and to look out for its best interests.32 This requires proper factual allegation of dependency by the party and an undertaking by the other side to advise, counsel, protect, or benefit the dependent party. Fiduciary Accountability. A fiduciary will be liable to account if proven to have acquired a profit, benefit or gain from the relationship by one of three means. • In circumstances of conflict of duty and interest. • In circumstances of conflict of duty to one person and duty to another person • By taking advantage of the fiduciary position. Banker and customer relationship as…show more content…
One of the most frequent bases for enforcement action and litigation against former directors and officers by institutions in receivership is disloyal self dealing and related forms of insider abuse. in Woods v. Martin Bank Ltd the claimant, a young man without business experience who had inherited a considerable amount of money, was given branch manager of the defendant bank At the time at which the advice was given the claimant did not maintain an account. When the action was brought against the bank, the question arose that whether the claimant was customer at the time the advice was given. Salmon decided that the relationship of banker and claimant’ s instruction to open an account in his name. Finding on the fact that that the advice to invest was reitreted on this occasion , hisLordshihip held that bank had failed to obser duty of care which is owed to claimant under the contract of banker and customer
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