By Okpi Bernard Adaafu (Oba) Esq.
Customers are usually frustrated by the bank because of unlawful placing of Post No Debit (PND) on customer’s account. Post No Debit (this is where the customer is blocked from transacting with his/her account).The law protects the customer by laying down rules for the bank to follow before placing PND on any customer’s account. However, these rules are often breached. This short and illuminating article is what you need whenever your bank attempts to violate your legal rights. It is important to state in legal parlance that, there is a technical meaning for: Bank, Banker, Customer and employee (in order to keep it simple, this article will utilize the ordinary usage of the aforementioned words).
There are several reasons why customer’s account may be blocked by the bank. However, it is good to start by enumerating the duties of the bank to a customer and vice versa.
DUTIES OF THE BANK TO THE CUSTOMER
- Duty to maintain secrecy
- Duty to honor cheques
- Not to pay without authority
- Duty to give accurate advice on investment
- Duty to exercise due care
DUTIES OF CUSTOMER TO THE BANKER
- Duty to carefully draw cheque to avoid fraud
- Duty to report forgery/fraudulent transactions
POWERS OF THE BANK TO FREEZE CUSTOMER’S ACCOUNT
Generally, the bank cannot freeze customer’s account without a court order. However, the banker is empowered to freeze customer’s account where there is evidence of fraud via the account. Basically, the bank can freeze customer’s account for the following reasons;
- Customer’s indebtedness to the bank: The customer may take loan from the bank but where there is default in repayment, the bank reserves the power to block the customer from withdrawing.
- Fraudulent transaction: this may occur where there is writing of bad cheque, money laundering, terrorist financing, illegal activities etc.
- Tax levy/student loan: The government can request a bank to freeze an account where there is unpaid taxes and student loan.
- Order of court: There are several reasons why the court may issue an order to freeze customer’s account; for example, a creditor can seek judgment against the customer. Where the creditor successfully obtained court order against the customer, the bank is empowered to freeze the customer’s account. The Central Bank Nigeria’s Governor can exercise its power under BOFIA and other relevant laws to obtain court order against customer’s account. The security agencies like EFCC, ICPC, Police, DSS and other prosecutorial authorities can apply to the court and seek an order to freeze customer’s account.
The reasons in number 1, 2, and 3 above afford the bank absolute right to freeze customer’s account without recourse to court order. Any other reasons apart from the grounds stated in number one to three above, requires court order. However, in practice, bank resort to arbitral freezing of customer’s account without following due process of law. The court has cautioned the bank against the temptation of freezing customer’s account without receiving court order. In the recent case of Adetokumbo Adetola v. Access Bank Plc LD/ADR/800/17, the court held the bank liable and awarded damages in the sum of Twenty Five Million Naira in favour of the claimant. In that case, at Ikeja High Court per Hon. Justice S. O. Nwaka stated that, “it is not in the power of the EFCC to authorize a Post No Debit (PND) on any customer’s account. The EFCC must not usurp the powers of a court of law. The duty of care owed the claimant by the bank is nothing but breached…. This is a society whose affairs are supposed to be governed by and conducted in accordance with the law. The EFCC and the bank taking law into their hands is nothing but shameful”.
The court emphasized that, the bank’s inaction of not demanding for an order of court or an official letter authorizing it to place PND on the claimant’s account amounted to negligence.
Suffice to say, security agencies, any third party and other authorities cannot direct the bank to freeze customer’s account without court order.
HOW TO UNFREEZE YOUR BANK ACCOUNT
- Visit the bank and seek for explanation. The bank will inform you of the reason why the account was blocked. If you are not at fault, demand that the PND be lifted.
- Where there is no fraud, you are not indebted to the bank, you are not under any tax obligation, the bank should lift the PND immediately else you can sue for damages.
- Where there is a court order against your account, seek legal advice from your lawyer.
From the foregoing, it has been established that, the customer’s exclusive right over his/her bank account is protected by the law. Where the bank violates the rules, the customer can exercise his/her right in court and claim damages. The bank must exercise its power of PND with caution in order to avoid unnecessary law suit which may go beyond monetary claims to destroy hard earned good will.
Read other articles by the author:
- .DIVORCE: https://thenigerialawyer.com/grounds-for-divorce-a-legal-digest/
- Life after Law School. https://www.legalnaija.com/2020/05/life-after-law-school-setting-up-right.html?m=1
Contact the Author:
OKPI BERNARD ADAAFU (OBA) ESQ (LL.B, B.L, ACIArb, MCMC) is an Associate at KANU G. AGABI, SAN (CON) & ASSOCIATES, Abuja, Nigeria.