Consumer rights: banking

In National Australia Bank Limited v Hokit Pty Ltd, PIAC represented the Consumers’ Federation of Australia (CFA) as a ‘friend of the court’ (amicus curiae) in the NSW Court of Appeal.

The case involved a Sydney business whose bookkeeper fraudulently made out cheques to herself and to her own interests. The bookkeeper forged the signature of a principal of the company without his knowledge.

The National Australia Bank (NAB) sought to overturn a long-established banking law principle that when a bank pays on a forged cheque, without a customer’s authority, the bank bears the loss. NAB asked the Court to redefine the customer’s duty to include taking positive steps to prevent cheque forgeries and detect unauthorised cheque transactions.

CFA was granted leave to make submissions as amicus curiae because of its expertise and experience in researching and working with consumer organisations, the banking industry, State and Commonwealth regulatory agencies and government departments in matters relating to banking practice. CFA was concerned to protect consumers in any change to banking practices.

PIAC argued that a change to the law would give rise to uncertainty and confusion, particularly for disadvantaged banking consumers, including those who are illiterate, have difficulty understanding banking practices and using bank facilities without assistance and those who have intellectual disability or are from non-English speaking backgrounds.

The Court denied the appeal from the NAB, upholding the traditional protection for customers in banking law. In addition to its significance for banking consumers, the judgment is an important precedent furthering the acceptance of amicus curiae interventions in Australia.

Read the decision

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