What follows is a submission to the Banking Ombudsman.  If a bank, could be diagnosed as insane, Bendigo would win the prize.

Bendigo Bank and Gibson

Submission of former customer

I refer to and adopt my previous submissions.  I recount them here in response to a suggestion made in the conciliation conference.

The dispute turns on an entry in the bank’s accounts on 22 December 2023 .  It shows  a transaction on Mastercard for nearly $5000 to an outfit called World Remit.   I had never dealt with that outfit -if it exists. 

After about five months delay, the bank told me it would require me to pay that amount.  I later learned that the bank relied on an industry code that I had never heard of, but which the bank says was part of my contract.

‘Bendigo Bank does not have a legal right to take action on these dispute claims.  We are bound by Mastercard Scheme regulations as Mastercard is the provisioner of the cards.  As detailed in your decline letter, we do not have recovery rights via the Scheme process due to the nature of how the transactions were processed.’

Later

‘The bank did not debit your Mastercard account. Your credit card ending in x6178 was a Bendigo Bank Mastercard.  Your card details and one-time passcode were utilised to make a payment to Worldremit. The transaction appears to be the result of your interaction with a company called IT support. Bendigo Bank have no recovery rights for the transaction and therefore we cannot reimburse you for this value.  Bendigo Bank cannot recover the funds as the transaction was performed via Mastercard Identity Check, a one-time password (OTP) was sent via SMS to your mobile number that ends with #583, the OTP was entered into the payment process to authorise the transaction. If a transaction is performed via this method Bendigo Bank is unable to raise a chargeback claim via Mastercard.’

Later:

‘That is correct the Bank has no recovery rights for this transaction as we are bound by Mastercard schemes.  I cannot assist you any further as previously stated so please escalate to AFCA if you wish to take this further’.

The bank offers to go half and half.  The dispute is therefore around $2500.  That is a symptom of madness in at least one party.

Nearly twelve months on, I still do not understand what is the case for the bank.

But what I do know now is that the bank refuses to cover me because its New York overlord refuses to cover the bank. 

Banks are not allowed to behave that way. 

The bank says that a deal they have struck with Mastercard, which the bank never told me of, prevents the bank from acting in my interests as a customer of the bank.

That is plainly unlawful, and that should be the end of this petty dispute.

What is the question?

The bank says the question is whether I can recover my loss from it.  That is wrong.  I have not sustained any loss.  There is merely a disputed entry in the bank’s books of account.  The bank paid out the crooks.  The question is whether it can recover its loss from me. 

I have made it clear that if it wants to do that, it will have to do so by an order of a court.  The bank simply refuses to say what it will allege for that purpose.  Just as it refuses to say whether it has taken legal advice.  The clear inference is that it has not.  This is at best insulting.  It is also very worrying.  Everything about this bank suggests it believes its word is law.

The bank is on the wrong tram

From the beginning, the bank has proceeded on the footing that the only relevant law is contained in the ASIC code (the ePayments Code).  For reasons I have given, I dispute that I am bound by it.  (I had never heard of it before.)  You will see immediately that this reliance comes at least in part from the fact the bank is asking the wrong question. 

But it is deeply troubling because it creates at least the impression that the bank operates outside the law.  (Someone who does that is called an ‘outlaw’.)  Part of that law, labelled ‘fiduciary’, is that the bank must show to me loyalty and good faith , and avoid conduct where its interests conflict with its obligations to me.  The bank has consistently failed to act accordingly.

A term of the contract?

Courts have long been wary of purported self-executing ordinances, especially where the party seeking to rely on one is a massive conglomerate that has infinitely more bargaining power.  Until the bank said it had resolved our ‘dispute’ – which I was unaware of – I had not heard of the ePayments Code. 

Neither would most Australians.  Even fewer would have read them and even fewer again would have understood them.  And hardly any person in the land would in any real way have agreed to be bound by them.  For a court to hold that as a matter of law, I had agreed to be bound by the terms of the Code would, I suggest, involve reverting to the role of ‘fiction’ in the ancient meaning of that term. 

The relevant law is stated in Cheshire and Fifoot, Law of Contract (12^th Aus. Ed.) par 3.21 and Carter and Harland, Contract Law in Aus. (4^th Ed) 616-617.  For present purposes, it is enough to refer to Olley v Marlborough Court [1949] 1 KB 532 and Causer v Brown [1952] VLR 1.  (The second text cites the English case as authority for the proposition that where a guest signs in at reception at a hotel, a notice in the room did not state a term of the contract because it was not brought to the guest’s attention before the contract was formed.)

The Code Napoléon provides (in Art.1134) as follows:

Contracts legally made have the force of law between those who have made them.  They cannot be revoked but by their mutual consent, or for the causes which the law authorises.  They must be well and faithfully fulfilled.

The common law is to the same effect.  But finding a legally binding contract requires a finding of fact – that in fact, the parties have agreed.  Fiction is not enough.  And that finding of fact should not be made lightly if as a result people are found to have put their house on the line. 

I may here say that so far, the bank has not produced any evidence of a communication from it to me that has the effect of binding me to the terms of a document I had never heard of.

Now, this point can be argued.  But the bank just refuses to deal with it.  Yet it is assumed to have been determined in its favour in everything it says – ad nauseam.  The emperor has not noticed it may not be wearing any clothes.

And this issue – whether the Code formed part of my contract with the bank – is a very different to the issue of the failure of the bank to inform me, as its customer, of the Mastercard agreement, and the effect of that agreement on the bank’s capacity properly to act for me as its customer.

Estoppel

I was invited to restate my position.  I did so.  Because it is fundamental, I will repeat it.  Estoppel by representation operates to prevent a party from departing from a representation of existing fact if the other party has acted on reliance upon it, and it would be unfair to that party to allow the other to resile from it.  (If authority is needed, I may refer to Cheshire and Fifoot, above, par 2.1 ff.)  You cannot have your cake and eat it.

It is common ground that when the criminals got to me, the bank’s website indicated that I had incurred a liability to the bank in respect of a transaction involving ‘World Remit’.  Acting on the faith of that representation, I conducted myself in the manner I did.  The bank now wishes to contend that no liability arose until I acted as I did in reliance on the bank’s representation.  Among other things, that would not be fair and the law would not allow it.  That result accords with common sense and accepted notions of fairness.  And it is fatal to the bank.

Misleading conduct and breach of duty

Another way to put that is to say that in publishing the suggestion that I had incurred a liability to the bank in respect of a transaction involving ‘World Remit, which the present contention of the bank must now refute, the bank acted unlawfully by engaging in misleading and deceptive conduct, and was negligent, and in breach of its duty properly to account to me. 

The primary obligation of a bank is to account to its customer in good faith.  In the well-known case of Lord Chedworth v Edwards (1802) 32 ER 268, 269, Lord Eldon said that ‘it is one of the first duties of an agent certainly to keep a clear account and to communicate the contents of it.’  The bank is not doing so here – or in the instance where it kept collecting insurance premiums for years on a property of mine that had been sold and for which the bank had held the Certificate of Title.  (It unilaterally offered to repay a fraction of what was owed.)  Here the bank must set out each phase of its dealings with the entity named in its accounts.  It refuses to do so.  It then gives various statements of its position.  It has failed ‘to keep a clear account and to communicate the contents of it.’

Once again, I suggest that if the bank refuses to deal with these allegations, all of which have been squarely raised before, the bank should be taken to have admitted them.  The bank may be unable or unwilling to submit to the law – presumably, without claiming to be above it – but that cannot be the case with the Authority.

I hear the mantra that the Authority seeks a result that is ‘fair’.  It must do so according to law, bearing in mind the sage observation that he who sits under a palm tree knows not where the nut may fall.

Breach of fiduciary duty

There is now a substantial argument about breach of fiduciary duty – apart from that referred to above on the nondisclosure of the contract between the bank and Mastercard.

The bank says it records material for one purpose and then uses it for another – in its interests and against the party to whom it owes obligations of loyalty, good faith, confidentiality, and secrecy. 

The bank took five months to respond to me.  Then it said it was against me when it had not warned me that it was labouring away for months for that purpose.  Then it said it could not accommodate me because it had obligations to a third party multinational that precluded it from doing so.  Can you imagine a clearer case of breach of duty by a fiduciary by the entry into obligations that conflict with its obligations to the customer?

Then it handed over to the Authority a recording of what I have said to it, although I had received the usual warning about ‘quality and training purposes’, and I was not asked if I would waive my right to secrecy.  Instead, the bank has ignored my request that it hand over every document it holds that would be discoverable.  The bank has ignored that, and the Authority is silent.

The bank now has to face the allegation that it cannot be trusted to deal with its customers in good faith.

An unrepresented litigant

We are in the ludicrous position where the customer is legally represented but the bank is not.  That is rude to me and my representative.  To put it at its lowest, it is not helpful for the Authority.

Unconscionability

On all those grounds, the bank has acted unconscionably within the terms of the relevant law and its position is legally untenable. 

As we have seen, this dispute is about less than $5000.  The bank has offered to split the difference.  No sane person goes to law over such a sum.  The studied obduracy of the bank shows it has no understanding of the role of a bank, and a sadly wrong notion of untouchability.

Retribution

Finally, reference was made to the possibility of my suffering a credit downgrade, if the Authority was against me, and I continue to refuse to hand over my money to the bank.  There is no way to put talcum powder on the rear of that bull, but if the bank prefers the cartel to a court, the response will be immediate and apt.

The Authority

As I have remarked before,if the Authority takes the view that it would be fair to require a 79-year-old pensioner to pay nearly $5000 to a bank because that bank cannot get it from its American partner (the fabulously wealthy Mastercard), then that is a conclusion that the customers of the bank should hear about – sooner rather than later. 

Nor have I overlooked the fact that in its relentless campaign over effectively $2,500, the bank relies on the contribution of ASIC, an organ of the federal government created to protect us from crooks.  The bank evidently regards the Code as a bomb shelter from which it need not emerge.

The conduct of the bank

As and when Australians ever get to look at the Code, after they get over their surprise, they may think that it puts the bank in a position where it is a judge in its own cause.  Just as this bank did when it was found collecting insurance premiums on a house which, to the knowledge of the bank, I had sold – just as some corporations collected life insurance premiums – almost literally over dead bodies.

And that is just how the bank is acting in this case.  ‘We have the protection of the Code and we pay homage to Mastercard.  So, don’t bother us with the law.  Our team are not here to deal with the law.  Their concern is industry practice.’

The Authority must repudiate that bank-skewed world view.

By employing people to confront customers of the bank in this way, the bank violates its obligations to me and other customers to act towards us diligently, loyally, and in good faith.  Worse, it violates obligations it owes to its staff.

Here is a complete denial of business decency.  ‘Professional conduct’ dies on our lips.  Miss Longmuir of the CBC looked after my parents and me for thirty years.  She would think she had landed on Mars. 

In short, this petty fiasco shows the decline and fall of banking in Australia.

Finally, Mastercard

We work to connect and power an inclusive digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. Our decency quotient, or DQ, drives our culture and everything we do inside and outside of our company.

Oh, Mastercard, Mastercard, where be your DQ now?