Many consumers received a rude shock earlier this week when they received notification from RaboDirect (Rabobank’s online banking and investments division) that it had changed its terms and conditions.
The main issue was a new clause, 29, entitled "Indemnity and Release for Electronic Communications." Clause 29 started with the general proposition that "You, and not us, will bear all risks in relation to any unauthorised or fraudulent notice, documentation or communication given to us by electronic means."
The next three subsections went on to spell out that, if the bank received communication by "electronic means" purporting (on the face of it) to be from you or an authorised signatory, then it was entitled to follow any instructions within this communication without incurring any liability, provided the bank had acted in good faith and was not proven to be negligent.
We felt the new terms and conditions may have been in breach of the Code of Banking Practice, and that they left customers vulnerable.
After contacting the institution we received a call from Rabobank lawyer John McLean. He explained that the clause was instigated by the bank's internal auditors, who were concerned about the risks associated with RaboDirect acting on instructions received outside its standard internet banking communication method (which uses a device called a “Digipass”).
The term "electronic communications" was only ever intended to refer to telephone, faxes and emails, and that could have been made clearer. McLean told us the bank didn't receive many instructions by phone, fax or email and they had never, to his knowledge, caused any problems in terms of fraud.
He told us that the controversial clause had caused so much trouble the bank planned to remove it.
Rabobank customers have no need to be worried – the controversy is over before it really began. Rabobank has now emailed customers to inform them of the removal of the controversial section 29.
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I was delighted to read in consumer that the Rabobank controversial clause had been removed.
But, I am still awaiting the email from Rabo to advise me that this has been done.
I am wondering if other Rabo customers received an email regarding this?
I took issue with a clause in ANZ's change of contract some years ago (6-7 years at a guess). The wording sounds very similar to this Rabo bank clause.
I phoned ANZ and told them I didn't agree with the new contract and would not abide by it. I pointed out that they could act on email communication purporting to be from me and the clause absolved them from doing any verification of identity, and given that anyone can fake an email address, the clause left me wide open to (albeit a possibly small chance of) fraud.
What followed was 6 months of appalling communication on ANZs part and their refusal to let me speak to anyone who actually understood the matter in either technical or legal terms.
I ended up taking a case to the banking ombudsman who also didn't really come to grips with the nature of the issue.
But, as I recall, somewhere towards the end of the 6 months I was dealing with it, several banks announced they were changing similar clauses in their terms because of a Consumer query on the matter.
So, good to see that you are again on the ball, although you may have forgotten that you dealt with the same thing a while back.
And bad on the banks for trying to make us liable for things beyond our control.
Finally, I do still have all the documentation in case ANZ happen to think my comments libellous, and I would be quite happy to air them again - I never did get a proper apology from them :-)