At my in-laws recently, a rather overbearing friend of theirs was expounding to the gathered on the evils of banks and their obligations to provide anyone who wants one with a bank account. Among other erroneous information, he opined that the right to have a bank account was inalienable and could not be denied by any financial institution.
Though it was not worth saying so at the time, he is in fact wrong. While there are agreements between the federal government and many of the chartered banks to provide access to low cost accounts for members of the public, there is no “inalienable right” to be given or to keep an account. A financial institution is generally entitled to ask any customer it wishes to move their accounts elsewhere. They do not need to provide a commercially reasonable justification for doing so.
Despite the central role banks play in the Canadian economy and in the provision of financial services, the relationship between a financial institution and its customers is essentially one of contract. That means the relationship between a bank and a depositor is governed by the account agreement between them. Most account agreements expressly provide that a banking relationship may be terminated, often without notice. Where the agreement is otherwise silent, the courts will imply, absent special circumstances, the ability of a financial institution to end its relationship with a customer upon providing the customer with reasonable notice. The length of that notice will depend on the nature of the individual relationship between the bank and its customer.
A recent decision in the B.C. Supreme Court illustrates this point. In RCG Forex Services Corp v. HSBC Bank Canada, 2011 BCSC 315, the customer, a foreign exchange business, had been asked by HSBC, for undisclosed reasons, to move its accounts elsewhere. It did not wish to do so and sued HSBC, seeking an injunction preventing the closure of its accounts. The customer asserted its accounts could only be closed if HSBC provided a justifiable reason. The Court denied the injunction and confirmed the ability of any financial institution to ask a customer to move its accounts elsewhere.
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