A bank has a limited duty to question a transaction by a customer to prevent harm to a customer’s interests, even if there is sufficient money available to pay the customer’s request and the request is validly made by the customer.
The scope of the duty is not clear, and must be balanced with the potential liability of the bank or other ADI for any losses by the customer if the transaction did not proceed as requested.
Where a bank has actual notice of the perpetration of a fraud, the bank may be liable for losses suffered by a customer who is the victim. For example, if a customer acts imprudently and transfers money to known fraudsters offering non-existent investments, and the bank does not intervene despite actual notice, the bank could be asked to compensate the customer less any contributory liability on behalf of the customer.
Banks also have a duty to people who are not customers, for example beneficiaries of trust accounts.
In the case of a bank or other ADI (lender) selling property as a mortgagee in possession following default on repayments on a mortgage, the mortgagee has a duty to act in good faith and not recklessly disregard the interests of the mortgagor (borrower or customer). The duty to act in good faith includes obtaining a fair price or market value (at the time of sale) for the property.
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