Banks Seek to Shift Liability for Forged Cheques

In a move that could leave customers shouldering the responsibility for forged cheque losses, the National Australia Bank is appealing against a New South Wales Supreme Court decision. The decision held the bank liable for $600,000 worth of cheques forged by a bookkeeper over three years. The NAB is arguing that customers should be obligated to take more care to avoid forgeries, a move that could have significant implications for small bank customers if successful.

Key Takeaways:

• The NAB is appealing against a New South Wales Supreme Court decision that held the bank liable for $600,000 worth of forged cheques.
• The bank is arguing that customers should be obligated to take more care to avoid forgeries, including ensuring cheques are drawn up in a way that does not leave the way open for fraud.
• If the appeal is successful, it could lead to a widening of duties for customers, placing unreasonable obligations on them to avoid being held liable for forgery losses.
• The NAB loses about $1 million a year in forgeries, mostly with business accounts.
• Small bank customers could be disproportionately affected if the bank's appeal is successful, with judges potentially interpreting the clarified duty in different ways.
• The Institute of Chartered Accountants recommends that cheque users use simple techniques to combat forgers, including deleting the words "or bearer" on cheques and using intricate typefaces or color to make cheques difficult to copy.

Statistics:

• The NAB loses about $1 million a year in forgeries.
• $600,000 worth of cheques were forged by a bookkeeper over three years.
• The NAB's appeal is not expected to be heard until next year.

Sources:

• "NAB v Hokit Pty Ltd"
• Corrs Chambers Westgarth
• Minter Ellison
• Institute of Chartered Accountants

(Institute of Chartered Accountants press release)