Banking slip sparks debate

Press, 2 May 1989, Page 4

Banking slip sparks debate

PA Auckland The removal of thousands of dollars from students’ bank accounts without their permission casts doubts on the sanctity of any bank account, says the Auckland Council for Civil Liberties.

The incident last month also raised important questions about computerised banking, the council’s president, Mr Barry Wilson, said. The accidental debiting of more than 5000 Victoria University students' accounts by up to $586 each, which Mr Wilson believed was illegal, showed the ease with which people’s legal rights could be over-ridden by computerised banking systems. Students had been expecting their first payment for the year on April 13, but were debited instead. The Wellington district manager of the Bank of New Zealand, Mr Logan Russell, said the mistake was caused by the accidental entering of the wrong code in a computer tape. All incorrect transactions were reversed the next day. The University Students’ Association’s

president, Mr Andrew Little, said a legal opinion indicated the deductions were unlawful. In applying for the allowance students had signed an application form which permitted their accounts to be credited, but not debited, he said. A clause in the form arranged for overpayments to be refunded but this was to be done by deducting them from subsequent payments, with no provision for debiting of the accounts under any circumstances. Liability was potentially shared between Victoria University, Databank and the trading banks. “It is clear that the Student Allowances Regulations 1988 impose a duty to pay and do not confer a right to deduct,” the legal opinion said. The Bankers’ Association’s executive director, Mr Simon Carlaw, said

the banks had been following instructions. "Given the number of transactions handled by the system, it doesn't do too badly. The banks were doing what they were instructed to do.” A Databank spokesman. Mr Geordie Cassin, said the incident was a very unusual occurrence, which was corrected as soon as possible. A Consumers Institute spokesman, Mr David Russell, said one of the parties should stand up and admit responsibility for the deductions. The professor of banking and management at Massey University, Professor Rae Weston, said there was no question that what had happened to the students could happen to anyone. The mistake should have been reversed immediately — not 24 hours later.