Law and Practice of Banking

The Further Education and Training Awards Council (FETAC) was set up as a statutory body on 11 June 2001 by the Minister for Education and Science. Under the Qualifications (Education & Training) Act, 1999, FETAC now has responsibility for making awards previously made by NCVA. Module Descriptor Law and Practice of Banking Level 6 N32841 www.fetac.ie

1 Module Title Law and Practice of Banking 2 Module Code N32841 3 Level 6 4 Credit Value 1 Credit 5 Purpose This module is a statement of the standards to be achieved to gain a FETAC credit in Law and Practice of Banking at Level 6. The module is designed to enable the learner to gain as in depth understanding of the principles of law relating to the business of banking and how these principles might apply in practical situations. 6 Preferred Level Level 5 Certificate, Leaving Certificate or equivalent qualifications and/or relevant life and work experiences 7 Special Requirements 8 General Aims 8.1 8.2 8.3 8.4 8.5 None Learners who successfully complete this module will: Explain the basis of the banker/customer relationship which gives rise to contractual rights and obligations. Analyse the rights and duties of bankers and customers and the consequences of any breach of these rights. Identify the rules regarding termination of contract between banker and customer. Understand the characteristics of negotiable instruments and the law applicable to the banker and customer. Describe the duties of the paying banker and the statutory protection available.

9 Units The specific learning outcomes are grouped into 4 units Unit 1 Unit 2 Unit 3 Unit 4 Banks and Banking Business Law of Contract Negotiable Instruments Opening and Conduct of Accounts 10 Specific Learning Outcomes Unit 1 Banks and Banking Business Learners should be able to: 10.1.1 Evaluate the role of the Central Bank of Ireland and Financial Services Authority of Ireland 10.1.2 Analyse the functions of the Retail Clearing Banks, Nonclearing banks, Building Societies, Private Banks, Credit Unions and other financial institutions. 10.1.3 Explain the legal definition of a Banker and a Customer in line with Central Bank Act 1997. 10.1.4 Describe the concept of the Doctrine of Precedent. 10.1.5 Evaluate the role of Judicial Interpretation. 10.1.6 Analyse the different types of account and their role in the banking system. Unit 2 Law of Contract Learners should be able to: 10.2.1 Define the validity of contract 10.2.2 Evaluate the relationship between the bank and customer as established in the case of Foley v Hill (1848) 10.2.3 Outline the terms of Contract between a Banker and a Customer 10.2.4 List the essential elements of a valid contract 10.2.5 Evaluate the implied terms with reference to case law 10.2.6 Analyse the Customer s duty to a banker. 10.2.7 Outline the rules governing the over crediting and over

debiting of customer s Account or Passbook. 10.2.8 Evaluate the function of the Bank as an Agent and outline the situations in which the Bank acts in such a role on behalf of the customer 10.2.9 Identify the duties of an agent with reference to case law. 10.2.10 Analyse the Limitation of Actions as set out by the Statute of Limitations Act 1957 and by the UK Limitation Act 1980. 10.2.11 Outline the 3 legal considerations governing the right of the banker to charge fees. 10.2.12 Discuss the practical considerations when charging fees/commissions. 10.2.13 Analyse the bankers rights to set-off where the banker /customer relationship is still operational and where the banker/customer relationship has ended. 10.2.14 Outline the situations where there is no right to set-off. 10.2.15 Discuss the rules in relation to the appropriation of payments taking into account the Rule in Clayton s Case. 10.2.16 Identity the 5 cases that terminate the bank s authority to pay. 10.2.17 Evaluate the bankers duty of secrecy, taking into account the Income Tax Act 1967 and the Taxes Management Act 1970 (UK). Identity the incidences where the bank has a duty of disclosure. 10.2.18 Demonstrate the customer s remedy for wrongful dishonour of a cheque and outline the two methods by which he can sue the bank.

Unit 3 Negotiable Instruments Learners should be able to: 10.3.1 Define the following terms Negotiable Instruments, Quasi Negotiable Instruments, Bills of Exchange, Bills of Lading, Cheques. 10.3.2 Describe how Bills of Exchange, including acceptance of Bill, liability of the parties to the Bill, rules governing Bill, and dishonour of a Bill, discharge of a Bill. 10.3.3 Define the meaning of a Cheque as set out in Section 73 of the Bills of Exchange Act, 1882. 10.3.4 Describe the essential elements of a valid cheque using case law and the Bills of Exchange Act 1882. 10.3.5 Outline the types of Endorsements on Cheques with reference to Bills of Exchange Act 1882. 10.3.6 Describe the Types of Holder of a cheque and the rights of a Holder. 10.3.7 Describe the types of crossing of a cheque and the status of a crossed cheque in Ireland under the Cheques Act 1959 and the status of a crossed cheque in United Kingdom under the Cheques Act 1992. 10.3.8 Discuss the rights and duties of each of the parties to a Cheque 10.3.9 Analyse the development of plastic card payment systems, with reference to EFTPOS, Credit Cards, Cheque Guarantee Cards, ATMs and Mondex. 10.3.10 Explain the Clearing System and the development of Credit Clearing. 10.3.11 Discuss the role of the Collecting Bank in the clearance of Cheques, their duties when dishonouring cheques, and the risks facing the Collecting Bank. 10.3.12 Evaluate the Statutory Protection available to the Collecting Bank under the Cheques Act 1957 (UK), Cheques Act 1959 (ROI) and Bills of Exchange Acts, 1882 and case law. 10.3.13 Describe the duties of the Collecting Bank in relation to cheques with reference to case law and statutory acts.

10.3.14 Discuss the role of the Collecting Bank as a Holder in due Course or a Holder for Value. 10.3.15 Describe the rights and duties of the Paying Bank under statutory law and case law. 10.3.16 Describe the risks facing the Paying Bank. 10.3.17 Evaluate the protection available to the Paying Bank under the Bills of Exchange Act 1882 and the Cheque Acts. Unit 4 Opening and Conduct of Accounts Learners should be able to: 10.4.1 Analyse the factors to be considered by banks when opening accounts with special reference to customer s identity, character etc. 10.4.2 Evaluate the principle of know your customer as enshrined in law as result of the Criminal Justice Act 1994 (ROI) and the Criminal Justice Act 1993 and Money Laundering Regulations 1993 (UK) 10.4.3 Evaluate the differences between a Power of Attorney and a Mandate, Standing Orders and Direct Debits. 10.4.4 Evaluate the legal implications of accounts held by minors, under what circumstances a minor can enter into a valid contract as defined in the Infants Relief Act, 1874. 10.4.5 Distinguish the difference between Joint Liability and Joint and Several Liability when dealing with Joint Accounts. 10.4.6 Outline the rules regarding the setting up of accounts for Clubs and Societies i.e. non-legal entities and the operation of these accounts. 10.4.7 Discuss the setting up operation of Executors and Administrator Accounts including the Death of a Personal Representative or a Breach of Trust by a Personal Representative. 10.4.8 Demonstrate an understanding of the general principles of a Partnership as set out in the various acts. 10.4.9 Outline the regulations as set out in the Solicitors Acts, 1954-1994 concerning the opening and conduct of solicitors accounts.

10.4.10 Outline the various types of Limited Company and the formation of Limited Liability Company. 10.4.11 Outline the constitutional documents of the company. 10.4.12 Discuss the role of a Limited Company as a customer and outline documents necessary for the opening of an account. 10.4.13 Define the Objects Clause and Ultra Vires Rule. 10.4.14 Demonstrate the differences between voluntary and compulsory liquidation and how a bank deals with cheques drawn by the company and cheques payable to the company. 10.4.15 Outline the setting up of Receiver and Liquidator Accounts. 10.4.16 Define the rules and regulations for the setting up of Trustee accounts. 10.4.17 Discuss the rules for the setting up of accounts for the 3 main types of churches, i.e. Catholic, Anglican, and Non Conformist Churches.

11 Portfolio of Assessment Summary Assignments (2) 60% Examination 40% 11.1 Assignments(2) The internal assessor will devise two briefs that require candidates to produce evidence that demonstrates an understanding and application of a range of specific learning outcomes. Each brief will require candidates to investigate a topic appropriate to the Irish Banking system and the law relating to same. Topics for each assignment will be drawn from different units of the module. The evidence for each assignment will include: An application of the main legal principles Relevant examples or case law An evaluation of the impact of the law on both the Banks and Customers The assignments may be presented in a variety of media, for example written, audio, video, graphic, visual or any combination of these. Any audio or video evidence must be provided on tape. All assignments carry equal marks.

11.2 Examination The internal assessor will devise a theory-based examination that assesses the candidates ability to recall and apply theory and understanding, requiring responses to a range of question types, short answer and structured. These questions may be answered in different media such as in writing or orally. The examination will be based on a range of specific learning outcomes from all units and will be 2 hours in duration. The format of the examination will be as follows: Section A 12 short answer questions. Candidates are required to answer 10 (1 marks each) Section B 4 structured questions Candidates are required to answer 3 (10 marks each) 12 Grading Pass Merit Distinction 50 64% 65 79% 80 100%

Individual Candidate Marking Sheet 1 Law and Practice of Banking N32841 Assignment 2 (60%) Candidate Name: _ PPSN: Centre: Centre No.: Assignment 1 Performance Criteria Maximum Mark Candidate Mark Relevant information appropriately included and organised and presented Relevant case law and/or examples included Legal principles appropriately applied Comprehensive evaluation of the impact of the Act 10 5 5 10 Sub-total 30 Assignment 2 Relevant information appropriately included and organised and presented Relevant case law and/or examples included Legal principles appropriately applied Comprehensive evaluation of the impact of the Act 10 5 5 10 Total Marks 60 Internal Assessor s Signature: Date: External Authenticator s Signature: Date:

Individual Candidate Marking Sheet 2 Law and Practice of Banking N32841 Examination (Theory-Based) 40% Candidate Name: _ PPSN: Centre: Centre No: Maximum Candidate Assessment Criteria Mark Mark Section A: short answer questions 12 short answer questions, answer any 10(1 marks each) (Indicate questions answered) Question No.:* Section B: structured questions Subtotal 10 4 structured questions, answer any 3 (10 marks each) (Indicate questions answered) Question No.:* Question No.:* Question No.:* Subtotal 30 TOTAL MARKS This mark should be transferred to the Module Results Summary Sheet 40 Internal Assessor s Signature: Date: External Authenticator s Signature: Date:

FETAC Module Results Summary Sheet Module Title: Law and Practice of Banking Module Code: L32841 Assessment Marking Sheets Assignment 1 Assignment 2 Maximum Marks per Marking Sheet 30 30 40 Candidate Surname Candidate Forename Examination Total 100% Grade* Signed: Internal Assessor: _ Date: This sheet is for internal assessors to record the overall marks of individual candidates. It should be retained in the centre. The marks awarded should be transferred to the official FETAC Module Results Sheet issued to centres before the visit of the external Authenticator. Grade* D: 80-100% M: 65-79% P: 50-64% U: 0-49% W: candidates entered who did not present for assessment