PIPEDA Case Summary #321

Bank opens new account without customer consent

(Principle 4.3 of Schedule 1)

Complaint

An individual complained that her bank used her personal information without her knowledge and consent.  Specifically, the complainant noticed on her bank statement that the name of the individual with whom she had held a joint account was no longer listed and that the account had been closed and then reopened.

Summary of Investigation

The complainant had held a joint account with a relative of her former spouse.  This relative was also an employee of the bank in question.  The original account had been established under the complainant’s and relative’s names as joint and several owners.  During the complainant’s divorce proceedings, the relative no longer wanted to be associated with the joint account and withdrew her name as an account holder.  At the relative’s request, the account was changed from a joint account to an individual account under the complainant’s name only.  The relative did this to ensure that the funds would remain under the complainant’s sole ownership and that she, the relative, would no longer have access to the money in the account.  The balance in the account was held “in suspense” for six days to allow the transaction to be completed.

According to the bank, in a joint account arrangement, it is obligated to take instructions from either party of the joint account, although it did acknowledge that it was unusual that the relative did not communicate her intentions with the complainant directly.  When the complainant and the relative originally opened the joint account, they both acknowledged receipt of and agreed to the terms and conditions contained in the banking agreement by signing the application form.  One of the clauses in the joint accounts section of the agreement authorizes the bank to deal with any one of the account holders for any other transactions or matters relating to the account.

The bank stated that, since the closure of a joint account is a transaction/matter relating to the account, the bank was justified in acting on the instructions of the employee (as joint account holder) to close the account so that her name would be disassociated from the account.  According to the bank, these actions were consistent with what the complainant had acknowledged/consented to at the time she opened the account.

The bank’s policy and procedures for changing a joint account to an individual account require the joint account to be closed and a new account be opened with a different account number in the name of the individual.  The signature of the owner of the new account must also be obtained.  In the complainant’s case, when the individual account was opened, a new account number was not used, the name associated with the account was not correct (the complainant’s name was misspelled), and the complainant’s consent (in the form of her signature) was not obtained.  The bank stated that the complainant was not made aware of the change to the account or requested to sign any documentation because the same number that had been used for the joint account was retained for the individual account.  The Office noted that the employee who opened the individual account was not the same employee with whom the complainant shared the joint account.  The employee responsible for the error received coaching to ensure that this situation does not recur.

The complainant informed the bank that she wanted the individual account to remain open.  Given that the account had been opened without her consent, the bank waived the service charge on it.

Findings

Issued December 7, 2005

Application: Principle 4.3 states that the knowledge and consent of the individual are required for the collection, use, or disclosure of personal information, except where inappropriate.

In making her determinations, the Assistant Privacy Commissioner deliberated as follows:

• While the bank may have had the complainant’s consent to close the account at the request of the other owner, it clearly did not have the complainant’s consent to open another account in her name.  The complainant was never made aware of the change to the account, nor was she asked to sign any documentation expressing her consent. 
• Given this, the Assistant Commissioner determined that the bank’s actions contravened Principle 4.3.
• However, the bank took steps to address the matter with the employee who made the error to prevent a recurrence, apologized to the complainant, and waived the service charge on the account.

Satisfied with the bank’s actions in this instance, the Assistant Commissioner concluded that the complaint was resolved.