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Which case won?

casea
The case for the bank
  • The terms and conditions of the bank accounts permit us to close them by notice in writing for any reason we deem appropriate.
  • Under the Banking Code of Practice, we may close an account with reasonable notice, which we have given.
  • We regularly review the industries, sectors and activities to which we provide banking services and have introduced a policy excluding escort services and brothels, due to the higher risk of money laundering and human trafficking.
  • The company’s business is therefore outside our risk parameters. It is also at odds with our corporate values.
  • We conducted a review of our decision to close the accounts and did not decide to close them arbitrarily.
  • We have extended the time for closing the accounts several times, most recently until 30 September 2020, given the Covid-19 pandemic and its impact on business in general. This gives the company around ten months to make alternative banking arrangements.
  • We should now be able to exercise our right to close the accounts.
caseb
The case for the escort agency
  • We dispute the bank’s policy to exclude the adult services industry, because it does not differentiate between legal and illegal participants in the industry.
  • Ours is a legitimate business which is licensed by the state government.
  • We are subject to stringent probity checks to be able to continue to operate.
  • The bank seeks to rely on the terms and conditions which refer to “unsatisfactory conduct” of the accounts, such as where a business bank account is being used for personal purposes. There was no such unsatisfactory conduct on our part.
  • The bank’s position is discriminatory, unfair and causes considerable loss to our business and reputation.
  • The bank should be prevented from closing our business accounts and we should be compensated for the impact the bank’s decision has had on our business.

So, which case won?

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Case A Case B

Case A won. You were right!

How people voted
a35%
b65%

Expert commentary on the court's decision

“While the onset of the Covid-19 pandemic had the effect of delaying the bank’s implementation of its decision to close the company’s accounts, it did not alter the bank’s decision or the eventual outcome.”
Ombudsman finds bank is entitled to close accounts

In its determination in Case number 687972, AFCA found in favour of the bank, National Australia Bank Limited, finding that it had fairly exercised its rights to close the accounts and was not obliged to keep them open as requested by the company.

In delivering its decision, the ombudsman reiterated the principle that just as the client of a bank could choose to move to another financial institution, so a financial institution could choose to end its relationship with a client.

Delays due to Covid-19 pandemic do not alter eventual outcome

The decision noted that the bank had extended the time for closing the accounts numerous times during the course of the complaint.

While the onset of the Covid-19 pandemic had the effect of delaying the bank’s implementation of its decision to close the company’s accounts, it did not alter the bank’s decision or the eventual outcome.

Company advised to find other banking services

The company had claimed a loss because it could not trade without the bank accounts. However, AFCA pointed out that the accounts were still open and that it was not apparent what steps the company had taken to make any other banking arrangements.

The ombudsman advised the company to find other banking services, determining that the bank was not required to keep the company’s business bank accounts open.

Neither was the bank required to compensate the company or take any other action.

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.
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