The clearing system
The mechanism for obtaining payment for cheques
What does the bank settle using the clearing system?
Cheques & Credit
Bank settle debs with other bank and the balances are called…
Operational balances
How long does it take for cheques to be cleared at Banker Clearing House
3 working days
3 banking services
- Retail services
- Commercial services
- Investment services
What happen when bank dishonours a cheque?
When paying bank has insufficient funds, it marks on the cheque the reason for the refusal to pay and post direct the cheque back to the receiving bank
Retail banking services
- Credit card
- Investments
- Share dealing
- Loans
- Foreign currency
- Wealth management
- Travel/Pet insurance meow meoww
Investment banking services
- Foreign currencies
- Commodities
- Derivatives
Banker
- Put money & cheques received on a customer’s behalf into their account
- Take out all cheques and orders paid from the account by the customer
- Keep account (current a/c)
Customer
You become a customer as soon as the bank opens an account for you in your name
OR
As soon as bank accepts their instructions and undertakes to provide a service
4 Contractual Relationships
- Receivable/payable
- Bailor/bailee
- Principal/agent
- Mortgagor/mortgagee
Receivable/Payable
- Deposit money
- Have overdraft
Bailor (C) /Bailee (B)
- Bank offer a safe deposit service
- Must take reasonable care
- Redeliver to customer/other person (bailment)
Principle (C) /Agent (B)
When principal doesn’t have sufficient specialist knowledge , agent acts for principle
Mortgagor (C) /Mortgagee (B)
Customer ask bank to give a loan secured by charge/mortgage (sell-able if customer doesn’t pay the loan)
The fiduciary relationship
Fiduciary relationships are formed when a beneficiary relies on the expertise of a fiduciary and is at the mercy of their control or discretion.
The rights of a banker
- Making charges/commissions
- Using customers’ money
- Demanding repayment of overdrawn balance
- Processing a lien over securities
Lien
A legal right to retain possession of another’s property to discharge a debt (sita)
The duties of customer
- Ensuring fraud is not facilitated when drawing cheques (sign a blank cheque/send through post)
- Tell bank for any known forgeries
-Indemnifying the bank when it acts on a customer’s behalf - Indemnifying - secure against possible loss/damagei
The duties of banker = The rights of customer
- Honour a customer’s cheque
- Receipt of customer’s funds
- Repayment on demand
- Comply with customer’s instructions
-Provide a statement - Confidentialitiy
- Advise of forgery
- Closure of accounts
- Care & skill
4 recognised reasons to disclose a customer’s account
1) Required by law
- dealing with drug trafficking
2) Public duty to disclose
- customer trades with enemy
during war
3) Interest of the bank
- bank sues the customer to
recover what it is owed
4) Customer given
express/implied consent
- customer asks a 3rd party to
obtain a bankers reference
What is NOT a customer duty?
- Keep records of the account
- Check the statements they get from the bank
- it is just a good business practise to monitor all bank accounts & bank reconcile
Paying -in slip
- Business/individual wants to pay money into the bank
- Acts as a summary documents (total up the cash)
Float
Money kept in the till at the end of the day so next day still got cash available to give change to customer
