FIJI CODE OF BANKING PRACTICE
Participating Banks observing the Code are the following member-Banks of the Association of Banks in Fiji:
|Australia and New Zealand Banking Group Limited|
|Bank of Baroda|
|Bank of South Pacific Limited|
|BRED Bank (Fiji) Limited|
|Westpac Banking Corporation|
|Opening An Account||3|
|Cards and Personal Identifications Numbers (PIN's)||4|
|- Issuing a Card||4|
|- Using a Card||4|
|- Security of Cards/PINs||5|
|- Loss or Theft||6|
|- Cardholder Liability||6|
|Other Payment Services||7|
|Provision of Credit||7|
|Statements and Audit Trails||8|
|Notes and Coins||8|
|Foreign Exchange Services||9|
|Other Financial Products and Services||9|
|Glossary of Terms||10|
1.1 This is the first edition of the Code. It sets out minimum standards of good banking practice to be observed by member-Banks of the Association of Banks in Fiji when dealing with their personal customers in Fiji.
1.2 This Code is effective from 1st June 1997 and will be reviewed regularly.
1.3 The Code is written to promote good banking practice based on the following principles:
- that banks will act fairly and reasonably towards their customers;
- that banks will help their customers to understand how their accounts and banking services operate through timely and adequate disclosure of information; and
- that customers and their banks have a mutual interest in maintaining the security and integrity of banking systems and technology.
1.4 Specific services may have their own terms and conditions which will comply with these principles. These will be expressed in plain language to the extent that it is consistent with legal certainty.
1.5 The Code addresses the key elements of a bank/customer relationship including:
- the steps taken by banks to protect customer privacy and the core information they will disclose to customers about their products and services;
- the respective rights and obligations of a customer and their bank in opening and operating a bank account;
- the obligations of banks in providing such other financial services; and
- how customers may resolve any complaints arising from personal banking services.
1.6 A Glossary of common banking terms used in the Code is attached to the Code.
2.0 CUSTOMER PRIVACY
2.1 Banks will observe a strict duty of confidentiality about their customers’ and former customers’ affairs and will observe all relevant common and statutory law.
2.2 All employees of the banks will be subject to an internal code of conduct and Banks will require all of their employees and their contractors and agents to sign a declaration respecting customer confidentiality.
2.3 Banks will only provide bankers’ references to their banks. Release of information to sources other than banks will only be by authorisation of the customer.
2.4 Banks will act responsibly in the use of direct marketing.
2.5 Banks will only disclose confidential customer information where required by law. Where not prohibited by law, customers may be notified that a disclosure order has been received by the bank.
3.0 BANK DISCLOSURE
3.1 Customers or prospective customers may request a copy of a bank’s Annual Report which sets out information on the activities of the bank.
3.2 In addition to any disclosure required by law, banks will inform customers of the terms and conditions of banking services on request. Where this is expressed in writing banks will use plain language to the extent that is consistent with the need for legal certainty.
3.3 Banks will give customers reasonable notice before any variation takes effect.
3.4 Banks will inform customers of the details of standard fees and charges payable in connection with the normal operation of their accounts.
3.5 Changes to term and conditions, standard bank fees and charges and changes to interest rates which may be altered by the bank, and the date on which the changes will take effect, will be notified by banks in at least one of the three ways:
(i) By advice on display in branches;
(ii) In the media; or
(iii) By direction communication with their customers.
3.6 Banks will ensure that their advertising and promotional literature does not contain deceptive or misleading information and complies with all relevant legislation.
3.7 In any advertisement that includes a deposit interest, in addition to any disclosure required by law, banks will include a statement that full details of the terms and conditions will be available on request. Upon request, banks will provide the following information:
(i) the rate of interest for the specified period and whether it may be varied over the period of the deposit;
(ii) any fees and charges which would apply;
(iii) any applicable Government charges and taxes;
(iv) the timing of interest payments; and
(v) other significant factors such as the consequences of early or partial withdrawal of the deposit.
3.8 Banks will inform customers of the interest rate applicable to their accounts, the basis on which interest is calculated and when it will be applied to their accounts.
3.9 A letter of offer for a loan will include:
(i) the rate of interest for the loan, and whether it may be changed during the period of the loan;
(ii) all fees and changes which would apply;
(iii) any Government charges, including taxes;
(iv) the specified period for which the loan is available, where relevant;
(v) other significant factors of the loan such as security requirements, termination fees or late payment penalties in an endeavour to ensure that a prospective borrower understands the principal terms of any borrowing arrangement.
3.10 All terms and conditions of use of a card issued by a bank will incorporate a prominent notice of the respective rights and obligations of the bank and cardholders in the event of loss occurring from lost or stolen cards or PINs and disputed transactions.
3.11 Banks will inform customers on the request of the standard daily cash withdrawal or payment limits applicable to card or other electronic banking services and will advise customers within a reasonable time when these standard limits are altered.
4.0 OPENING AN ACCOUNT
4.1 Banks will satisfy themselves about the identity of a person seeking to open an account or to undertake a significant one-off transaction in order to protect their customers, the public and themselves against misuse of the banking system. Identification requirements will be advised to prospective customers on application.
4.2 Like any other business, a bank may decline to open an account or to make available any of its particular products or services whether or not the bank is satisfied about the identity of a customer or prospective customer.
4.3 Banks will inform customers proposing to open a joint or multiple account how funds may be credited to or debited from such accounts and the options available for authorizing such transactions. Customers will be informed of their liability for indebtedness which may arise in the event of subsequent disagreement between the customers owning a joint or multiple account or for cards operating from that account.
4.4 Either the customer or the bank may end any banking relationship at any time subject to any relevant terms and conditions.
5.1 Issuing a Card
5.1.1 Banks will not issue a card or PIN (other than a replacement) except where the bank is satisfied that a request authorized by the customer on whose account it is to be issued is genuine.
Cards (other than a replacement) will not be issued to customers without banks obtaining their consent.
5.1.2 Where cards and PINs are personally collected by cardholders, banks will be satisfied as to the identity of the recipient before allowing the card to be used, and will, where possible, obtain a signed acknowledgement of receipt from the cardholder. Where cards/PINs are delivered in any other way, cards and PINs will be sent separately.
5.1.3 Cardholders will not be liable for losses occurring before they have received their card and if applicable, PIN. In any dispute about the receipt of a card and/or PIN delivered to a cardholder other than a person, banks will not rely only on proof of delivery to the cardholder’s correct address as proof that the card and/or PIN was received by that person. Nor shall banks assume that a card or PIN sent to the cardholder’s current address has been received by the cardholder within a certain time after being posted.
5.1.4 Banks will inform cardholders if a card is issued by them has more than one function, and will explain the options available for that card.
5.2 Using a Card
5.2.1 Banks will inform cardholders that transactions initiated by cards are like cash transactions and cannot be subsequently stopped by the cardholder.
5.2.2 Banks will also inform cardholders of the risk involved if they should authorise card transactions in advance against subsequent charges for the purchase of goods or services.
5.2.3 At a time of an electronic card transaction through an electronic network such as an ATM or EFTPOS, where a printed transaction record is offered or produced it will include:
(i) the amount of the transaction;
(ii) the date and, if practicable, the time of the transaction;
(iii) the type of the transaction, for example, deposit, withdrawal, transfer, EFTPOS payment;
(iv) non-specific information to enable the cardholder but no authorized person to identify the account(s) being debited and/or credited;
(v) data that enables the card issuer to identify the cardholder and the transaction;
(vi) a name, number or code that enables the location where the transaction was made to be identified;
(vii) where relevant, the name of the person or account to whom the payment or deposit was made; and
(viii) in the case of accounts accessed at an ATM, the balance of the account where possible.
5.3 Security if Cards/Pins
5.3.1 When a PIN is issued or selected, banks will inform customers that a PIN is unique to them, and if written down is capable of being lost or stolen. A lost or stolen card with a PIN, may therefore be used by another person for an unauthorised transaction which may result in loss to the customer.
5.3.2 Banks will inform cardholders of the importance of and their responsibility for safeguarding their card and for committing their PIN to memory. Warning will also be given against:
(i) keeping any record of the PIN;
(ii) writing the PIN on the card or anywhere else;
(iii) disclosing the PIN to any other person, including family or those in apparent authority (including bank staff); and
(iv) negligent or reckless disclosure of the PIN by, for example, failing to take reasonable care in keying-in the PIN at a terminal to prevent another person from identifying the PIN.
5.3.3 Where cardholders are able to select their own PINs, banks will, prior to selection of a PIN, recommend that cardholders do not use combinations such as birth dates, sequential numbers (e.g. 3456), any part of a personal telephone number, or other easily accessible personal data.
5.3.4 Banks will conform to all accepted standards for the methods of generation, storage and terminal security for the use of PINs.
5.4 Loss or theft
5.4.1 Customers are responsible for advising their bank of a lost or stolen card, the unauthorised use of a card, or the actual or possible disclosure to another person of their PIN as soon as this becomes known to the customer. Banks will log such reports by customers so that there is a record of when notification was made.
5.4.2 Banks will provide telephone numbers by which customers can notify a lost or stolen card, unauthorised use of card, or disclosure of their PIN as soon as this becomes known.
5.4.3 Banks will advise cardholders proposing to use their cards overseas of the procedures to be used to report lost or stolen cards or disputed transactions.
5.5 Cardholder Liability
5.5.1 A cardholder has no liability for loss from:
(i) fraudulent or negligent conduct by employees or agents of the card issuer or parties involved in a network arrangement or of their agents or employees;
(ii) faults which have occurred in the machines, cards or systems used unless the fault was obvious or advised by message or notice on display;
(iii) unauthorised transactions occurring before the cardholder has received their card and/or PIN (see paragraph 5.1.3); and
(iv) any other unauthorised transactions where it is clear that the cardholder could not have contributed to such losses.
5.5.2 A cardholder is liable for all loss if they have acted fraudulently either alone or together with other persons.
5.5.3 A cardholder may be liable for some or all loss if they have contributed to that loss from unauthorised transactions by:
(i) selecting an insecure PIN;
(ii) failing to reasonably safeguard their card;
(iii) keeping a written record of their PIN;
(iv) disclosing their PIN (or Password) to any other person;
(v) failing to take all reasonable steps to prevent disclosure to any other person when keying-in their PIN (or using their Password); or
(vi) unreasonably delaying notification to the card issuer of the loss or theft of a card, or of the actual or possible disclosure to another person of their PIN.
5.5.4 When a cardholder has promptly reported the loss or theft of a card, or the actual or possible disclosure or their PIN, the cardholder has no liability for loss occurring after notification unless they have acted fraudulently.
6.1 Banks will encourage customers to safeguard their cheque books at all times and to report to their bank the loss of any blank cheques, or of any unauthorised withdrawals as soon as possible. Similarly, if a completed cheque is lost or stolen it should be reported to their bank so that payment may be stopped before it has been presented to payment. Cheques should never be pre-signed in blank.
6.2 Banks will provide customers, usually at the time an account is opened, with an explanation of the protections available from usual cheque crossings for which brief explanations are set out in the glossary to this Code.
6.3 Banks will explain to customers when they may stop – or countermand – a cheque and any fees or charges which may apply to this service.
7.0 OTHER PAYMENT SERVICES
7.1 At their discretion, Banks may provide customers with other payment services including but not limited to Direct Credits, Automatic Payments or Direct Debits, or access to their account by means of instruction via telephone or personal computer.
7.2 Where such services are used, banks will inform customers, in addition to terms and conditions which may apply, the following:
(i) Any fees or charges applicable to the service;
(ii) The deadline by which a customer may alter to stop – or countermand – a payment service; and
(iii) The bank’s rights to alter or adjust a standing payment service without prior reference to the customer.
8.0 PROVISION OF CREDIT
8.1 Banks will provide a loan only where information available to them at the time of the lending decision leads them to believe that the borrower is able to service the debt and meet the terms and conditions of the loan.
8.2 In considering whether or not to lend, banks may take account of information from various sources, which may include, but are not limited to:
- prior knowledge of their customers’ affairs;
- opinions from other Banks;
- information obtained from Credit Reference Agencies; and
- information supplied by applicants.
8.3 Banks will encourage customers who are in financial difficulty to let them know immediately so that due consideration may be given to cases of hardship.
8.4 Banks will inform persons proposing to give them a guarantee or other security for someone else’s liabilities that they should seek independent legal advice before doing so because of the risk of ultimate liability.
8.5 Banks will also inform those persons whether the guarantee or security will be unlimited as to amount, or if this is not the case, what the limit of their liability plus interest may be.
8.6 If customers overdraw their accounts without prior agreement or exceed an agreed borrowing limit, banks may charge a “penalty” rate of interest and make other charges which will be notified to customers.
8.7 Banks will promptly advise customers if they exercise their right to combine a customer’s accounts to set-off a customer’s credit balances against other accounts owned by that customer which are in debit.
9.0 STATEMENTS AND AUDIT TRAILS
9.1 Banks will provide customers with a printed record of all account transactions since the previous statement at least every twelve (12) months unless it is agreed that a passbook will be the only record of transactions on an account.
9.2 The statement will show:
(i) for each transaction occurring since the previous statement:
- The amount of the transaction;
- The date the transaction was credited/debited to the account;
- The type of transaction;
- The transaction record number or other means by which the account entry can be reconciled with a transaction record; and
- For card transactions, automatic payments, and direct credits and debits the name of the person to whom payment was made or received;
(ii) charges relating to the use of transactions including Government charges; and
(iii) the address or telephone number to be used for enquiries or reporting errors in the statement.
9.3 Banks will encourage customers to check all entries on statements and any apparent errors or unauthorized transactions, which should be reported to the bank as soon as possible or as may be agreed with the bank in the applicable terms and conditions of use.
10.0 NOTES AND COINS
10.1 Banks will notify customers on request of any fees and charges for the handling of notes and coins.
11.0 FOREIGN EXCHANGE SERVICES
11.1 Banks will provide customers with detail of the exchange rate and their commission charges which will apply or, when this is not possible at the time, the basis on which the transaction will be completed.
11.2 On request, banks will provide customers with an indication of when money sent overseas on their instructions should normally arrive at the overseas bank.
12.0 OTHER FINANCIAL PRODUCTS AND SERVICES
12.1 Banks may offer customers other financial products and services as provided by law.
12.2 Where such products and services are used, banks will in addition to any disclosure required by law, explain the applicable terms and conditions including:
(i) Any fees and charges applicable to the service and how they will be charged; and
(ii) The basis by which the bank or the customer alter or terminate the arrangement and the consequences of such a modification; prior to the customer entering into the arrangement with the bank.
13.1 Each bank has its own internal complaints procedures for the handling of complaints about any product or service offered by or obtained from the bank, and banks will inform customers that they have such procedures. On request, customers wishing to make a complaint will be told how to do so and what to do if they believe that the complaint has not been answered satisfactorily. Such procedures are free of charge to customers.
14. GLOSSARY OF TERMS
This Glossary explains the meaning of words and phrases. They are not precise legal or technical definitions.
An arrangement by which customers instruct their bank to make regular payments for a fixed sum from their account for credit of another person’s bank account.
A customer may cancel or amend automatic payment instructions by giving instructions to their bankers.
ATM – Automatic Teller Machine (or Cash or Money Machines)
A machine provided by a bank which enables customers through the use of a card and Personal Identification number (PIN) to withdraw cash from and make deposits to their accounts, and to access other personal banking services.
A bank together with its related companies which is wholly or partly owns, providing a range of financial services.
A rate of interest set by individual banks used as a starting point for the fixing of certain rates of interest. Thus, if the basis of interest on a loan is 3% above base rate, and the base rate is 14%, the loan interest rate would be 17%. The interest rate for all like customers will thus vary whenever the base rate changes (see also Percentage Margin below).
“Bounced” (or Dishonoured) Cheque
The everyday term for a cheque which after being paid into an account is returned “unpaid” leaving the person to whom the cheque is payable without the money in the account for that item.
There are number of reasons for cheques being returned unpaid (see Unpaid Cheques below).
The bank issuer of any Electronic Funds Transfer (EFT) Card (see EFT Cards).
A person issued with an EFT Card and associated PIN (or approval to select a PIN) by a card issuer.
Any supplier of goods and services who accepts a card in payment for the supply of those goods and services.
Cardholder’s Nominated Account
Any account approved (by the card issuer) in response to a request by the cardholder as an account which is available for electronic access.
Card Notification Organisations
Companies who will at the request of a cardholder maintain a record of all the cards held by the cardholder and notify card issuers of the loss or theft of the cards.
Balances in a customer’s account that are available to be withdrawn by the customer. Each bank will explain to its customers the length of time that it takes for cheques paid in to be “cleared” before they can be drawn against. This period may vary depending on the bank and branch the cheque is drawn to.
The period of time taken for a cheque or credit to pass from one bank account to another.
A charge, usually calculated as a percentage of the transaction, applied when providing services, for example when customers buy or sell foreign exchange.
A customer’s instruction to a bank to cancel or override a previous instruction to make a payment or transfer of funds.
Credit Reference Agencies
Companies which hold information about individuals. Banks may provide information to, and seek information from, these agencies to assist with the decision whether or not to provide loans or grant credit to customers.
A method of assessing the risk involved in lending to customers or prospective customers based on information provided by them on an application form.
Another name for a cheque account, the principal attribute of which is that customers are able to access the cleared balances in such accounts simply by drawing cheques or by issuing other payment instructions to their banks.
Debt Collection Agencies
Firms in the debt collecting business.
Failure to repay a loan or overdraft or meet other conditions as promised or agreed.
An arrangement whereby customers agree to receive regular payments such as salary from another person or company by means of direct lodgment to their bank accounts.
An arrangement by which, with a customer’s authority, a company or other organization (known as an initiator) can claim regular payments direct from a customer’s account. The amount can be fixed or variable and if variable the initiator must advise the customer in advance – normally at least 10 days before the payment date. To cancel or amend a direct debit, customers must give written instructions to their bank and should also notify the initiator.
EFT Cards (or Payment Cards)
A general term for any card which may be used to pay goods and services or access an ATM machine.
Common examples are:
1. Credit Card - a card which allows customers to buy on credit and to obtain card advances. Customers receive monthly statements and may pay the balance in full, or part usually subject to a certain minimum. Interest is payable on outstanding balances.
2. Charge Card - similar to a credit card. It enables customers to pay for purchases, and in some cases to obtain cash advances. When the monthly statement is received the balance must be paid in full.
3. Debit Card - a card that can be used to access a customer’s cheque or savings account to obtain cash or make a payment at a point of sale. The customer’s account is subsequently debited electronically for such a transaction.
4. Cash Card - a card used to obtain cash from an ATM (Automatic Teller Machine/Cash Machine).
5. Cheque Guarantee Card - a card used by a bank which guarantees the payment of a cheque up to the amount shown on the card.
6. Multi-Function Card - some EFT Cards may combine one or more of these functions.
EFT-POS - Electronic Funds transfer at Point of Sale
A method of payment whereby customers may pay for goods and services by means of an EFT card. Processing of such a transaction is handled electronically (see EFT Cards, above).
The rates at which financial institutions will buy foreign currency from customers or sell it to them.
This term is usually used in relation to a loan from a bank, and in this context means the rate that expresses the total cost of the loan (interest plus any fees) as a percentage per annum of the amount of the loan.
A rate of interest which does not change, usually for a specified period of time.
A legal document by which a person, (the Guarantor) promises to repay the debts of another person if that person fails to do so (see Third Party Security, below).
1. A legal document by which customers (known as the mortgagors) pledge their homes or other property as security for loans from financial institutions (called the mortgagees) to purchase or borrow against. Where mortgagors fail to keep up mortgage payments banks can, in certain circumstances, sell the property to repay the loan.
2. The term is often also used to describe the loan provided for house purchase.
Not Negotiable Cheques
A cheque which has been marked with two transverse parallel lines across the front with the words “not negotiable”, usually written within the parallel lines. If a cheque has been crossed in this way and has been drawn in favour of a named payee, or bearer, the person who has drawn it will have some protection if that cheque subsequently becomes lost or stolen.
This withdrawal of funds, with or without prior arrangement, from a bank account in excess of a customer’s credit balance.
A higher rate of interest charged on overdrafts when customers borrow from their bank without prior arrangement, or exceed approved overdraft limits. Penalty rates of interest may also be charged on mortgage repayments if scheduled repayments are missed.
Rate of interest shown as a percent figure above a bank’s base rate. For example, if a base rate is 14% and the rate of interest charged on an overdraft or loan is 17%, then the percentage margin is 3%. The margin may be varied if circumstances relating to the loan change.
PIN – Personal Identification Number
A confidential number provided by a card issuer to a cardholder. Use of this number by the customer will allow the card to be used either to withdraw cash or to authorise payment for goods and services, by means of a special terminal device.
Resident Withholding Tax (RWT)
A Government tax on interest income required to be deducted by banks and other interest payers on interest payments.
A service offered by many banks in which valuable items such as house deeds, wills or share certificates can be deposited with a bank for safe-keeping. A charge may be made for this service.
A word used to describe the pledging of assets, such as house deeds, life policies and shares to banks as support for loans granted to customers. A mortgage document (see Mortgage, above) is a common type of security. If the loans are not repaid the bank’s position is “secured” which means that it can sell the assets to meet the amount outstanding on the loan.
A customer request for special clearance of a cheque.
A commonly used term to describe the countermand of a cheque.
These are deposits which are lodged by customers with banks for mutually agreed periods of time, usually a minimum of 30 days, on which banks pay a set rate of interest.
Third Party Security
Security provided by a person who is not the borrower.
Specially printed cheques ordered by customers, usually for overseas, to obtain cash and pay for goods and services. These special cheques are available in fixed amounts in a number of major world currencies. Security is maintained by signature on the cheque at the time of purchase. A second matching signature must be added at presentation. A commission is generally payable on purchase of these cheques.
An item recorded on a customer’s account which has been made without his or her authority.
A cheque which a bank is not able to pay for a number of reasons, the most common of which are:
- Refer to drawer - the recipient of the cheque (the payee) should ask the person issuing the cheque why it has not been paid. This frequently means that there is not sufficient money in the issuer’s account.
- Present Again - similar to above, but used when the bank expects enough money to be available to pay the cheque and therefore suggests it is presented again for payment.
- Post-dated - the cheque cannot be paid because its date is some time in the future.
- Stale Cheque - the cheque cannot be paid because its date is too old or “stale”, normally more than 6 months.
- Effects not clear - there is not enough money in the account of the issuer of the cheque, because cheques which have been credited to that account have yet to be paid.
- Words and figures differ - the amount of the cheque written in words is different from the amount written in numbers. If it is unclear which amount should be paid the cheque is returned.
- Payment Stopped - the issuer (drawer) of the cheque has informed his or her bank not to pay the cheque, i.e. to stop payment.
- Signature differs - there is some doubt whether the signature on the cheque is genuine.
A rate of interest that may vary during the period of a borrowing. Frequently variable rates on borrowing by personal customers are linked to a bank’s base rate.