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Disclosure of information by the bank-protection of the guarantor's rights or a threat to the doctrine of confidentiality: some implications for the global financial meltdown following the sub-prime crisis.

Presented by: Dr Charles Chew

Wednesday, 5 August 2009

About the speaker:

Dr Charles Chew, Senior Lecturer, is an expert in finance and security law and consumer protection law and has published extensively in these areas. His other research interests are in the areas of contract law, insurance law, corporate law, comparative law and international trade law.

Before he was appointed to his present position in the Law Faculty, Dr Chew had a commercial, corporate and finance and banking practice in Mallesons Stephen Jaques, Allen Allen and Hemsley (now Allens Arthur Robinson) and Westpac. He was also a lecturer in the Faculty of Commerce in the University of Western Sydney.

Abstract

Guarantees or sureties, the most common kind of securities are being signed in situations where guarantors have little information or are misinformed about important aspects of the transaction. It is seldom, for example, that guarantors have any information about the borrower's loan or the financial soundness of the business they are supporting and so are unable to assess the risk undertaken. Such information, if disclosed, is indispensable if guarantors are to give a fully informed consent to participate in the transaction. This paper critically examines the bank’s duty of disclosure and its application to guarantees. The related duty of confidentiality or secrecy is discussed against legislative provisions in respect of privacy. The paper also assesses the question of how the bank is to reconcile its obligations to disclose information to the guarantor and its duty of confidentiality to its customer. In this way, it tests the doctrine of disclosure of the bank in light of the threat to the confidential relationship which is itself being eroded by the legislature.

On another tack, guarantees are very much in the news in the global recession as governments all over the developed world, including ours, attempt to "guarantee" customer's bank deposits as banks were collapsing in the wake of the sub-prime debacle.

For further information contact:

Dr Nadirsyah Hosen
Lecturer
Faculty of Law
University of Wollongong NSW Australia
Email: hosen@uow.edu.au
Phone: +61 2 4221 4192
Fax: +61 2 4221 3188