11. appendix

11.1 glossary

This glossary explains the meaning of words used in this Code and other common banking terms. They are not precise legal or technical definitions.

Acquiring Bank

The bank which provides Card payment services to a Merchant.

Automatic Payments

Arrangements by which Customers instruct their banks to make regular payments for a fixed sum from their account into another bank account.

ATMs (Automatic Teller Machines or Cash or Money Machines)

Electronic terminals that allow Customers to use Cards and PINs to access their accounts, withdraw cash, make deposits, transfer funds or access other services.

Bank Cheques

A cheque that is purchased from, and drawn on the account of a bank.

Bill Payments

A one-off transfer of funds from the paying customer’s account to a pre-established payee’s account, which is initiated by the paying customer. The paying customer decides the payment amount and the payment date for each payment and advises the paying bank, via their bank’s telephone banking service, Internet Banking service or other means.

Branches

A term for a customer contact site which the customer can physically visit and carry out their general banking requirements. They may also be called “representative offices”, “pods”, “outlets”, “customer service centres”, etc.

Cards

A general term for any Cards that can be used to pay for goods and services, or to access ATM machines or other electronic banking services such as EFTPOS.

Examples are:-

Credit Cards - Cards that allow Customers to buy on Credit and to obtain cash advances. Customers receive monthly statements and may pay the balance in full or in part, though there is usually a specified minimum payment.
Charge Cards - similar to Credit Cards. They allow Customers to pay for purchases and, in some cases, to obtain cash advances. When the monthly statement is received, the balance must be paid in full.
Debit Cards - Cards that can be used to access your accounts to obtain cash or make a payment at a point of sale. Customers’ accounts are debited electronically for these transactions.
Cash Cards - Cards used to obtain cash from ATMs.
Multi-Function Cards - Cards that combine more than one of these functions.

Chargebacks

The reversal by the bank of transactions made to Customers’ Credit Card accounts which are found to be:- incorrect charges; or not valid charges; or not authorised charges; and notified to the bank within the required time limit. Cheque Crossings Ways of marking cheques to limit the ease with which they can be exchanged for cash. Limited protection will be given by parallel lines across the front of the cheque. This crossing provides only a very limited protection if the cheque is lost or stolen; essentially it means only that the cheque should not be cashed but should be paid into a bank account. This protection can be improved by writing the following words between the transverse lines:-

account payee only; or
not transferable.

Cheques - Not Negotiable

Cheques that have been marked with transverse parallel lines across the front with the words “not negotiable” usually written between the parallel lines. If cheques have been crossed in this way, and if they name the payee, or bearer, the person who has drawn it will have some limited protection if it is lost or stolen.

Cheques - Not Transferable/Account Payee Only

Cheques that have been marked with transverse parallel lines across the front, with the words “not transferable” or “non transferable”, or the words “account payee” or “a/c payee” (with or without the word “only”), usually written between the lines. Cheques crossed in this way are payable only to the party named on the cheque. Such cheques offer the greatest protection if they are lost or stolen as they must be deposited in an account in the name of the payee.

Cleared Balances

Available balances able to be withdrawn.

Commissions Charges for providing services, for example, commission is charged by the bank when Customers buy or sell foreign exchange.

Credit

An arrangement by which the bank provides funds to a customer in exchange for a promise to repay at a later date, along with any interest and charges payable.

Credit Facilities

These may take several forms, for example, Overdrafts, loans secured against a given Security or unsecured loans.

Credit Reference Agencies

Companies that hold records of a Customer’s Credit history. Customers As used in this Code, “Customers” means all Customers of a participating bank (generally referred to as “you” or “your” in this Code).

Debt Collection Agencies

Companies whose business is to collect debts from people who have failed to meet any obligation to pay.

Default Rates

Higher rates of interest charged when Customers draw funds from their bank without prior arrangement or when approved Overdraft limits are exceeded. Default Rates of interest may also be charged on Credit Facilities if scheduled repayments are missed.

Defaults

Failure to repay Credit or to meet other conditions that were promised or agreed to.

Direct Credits

Arrangements by which payments, such as salaries, are directly credited to Customers’ bank accounts. Direct Debit Initiator The party who initiates a Direct Debit under a Direct Debit System from a customer’s account at the customer’s bank. Direct Debits Arrangements by which a customer authorises the bank to make payments directly from their accounts to a third party who has initiated the arrangement. The amounts can be fixed or variable. If variable, the Direct Debit Initiator must give prior notice to the customer of variations.

Disclosure Statement

Disclosure to Customers of financial and other information by banks as required by the Reserve Bank of New Zealand Act 1989.

Dishonoured Cheques

Cheques that are presented for payment and are not paid, leaving the person to whom the cheque is payable without the money.

EFTPOS (Electronic Funds Transfer at Point of Sale)

A method of payment by which Customers can use Cards to pay electronically for goods or services or to obtain cash.

Exchange Rates

The rates at which your bank will buy or sell foreign currency.

Finance Rates

This term is usually used in relation to a Credit Facility from a bank. In this context, it means the rate that indicates the total cost of the Credit Facility (interest plus any fees) as an annual percentage of the amount of the Credit Facility. Under the Credit Contracts Act 1981, this must be set out in writing on most loan agreements.

Fixed Rates

Rates of interest that stay the same, usually for a specified period of time.

Guarantees

Legal arrangements by which someone (the guarantor) promises to repay the debts of a Customer if that Customer Defaults in making repayment.

Inform

As used in this Code, “inform” refers to any written (in electronic or paper form) or oral communications from banks to Customers, whether delivered in person or not, about any bank products or services.

Internet Banking

Means use of a computer or device to connect you to our Internet Banking systems via the Internet and carry out a range of transactions and obtain information about your accounts

Joint and Several

Relates to liability for obligations to a bank including under a joint account or Credit Facility where the liability lies with:-

all of the joint account or Credit Facility holders together; or
any one or more of the joint account or Credit Facility holders individually.

An account or Credit Facility holder may also be jointly and severally liable with their guarantor.

Key Information Summary

A summary of the key features in the Disclosure Statement.

Merchants

Any suppliers of goods or services who accept payments by Card.

Overdrafts

The withdrawal of funds from bank accounts, to a greater total amount than a Customer’s Credit balance, with or without prior arrangement.

Passwords

A confidential combination of letters and/or numbers used by Customers to establish their right to access to their accounts.

PINs (Personal Identification Numbers)

Confidential numbers used by Customers to access their accounts via ATMs, EFTPOS facilities, the Internet and other electronic banking services such as telephone banking.

Reasonable Accommodation

Means necessary and appropriate modification and adjustments not imposing a disproportionate or undue burden, where needed in a particular case, to ensure to persons with disabilities the enjoyment or exercise on an equal basis with others who use our services. (This definition has been adapted from Article 2, Draft Convention on the Rights of Persons with Disabilities, Eighth session, New York, 14-25 August 2006).

Safe Custody

A service offered by some banks by which valuable items such as house titles, wills or share certificates can be deposited in a bank for safe-keeping, usually subject to a fee.

Security

The promising of assets (such as titles to property, life policies and shares) to banks as support for Credit Facilities granted to Customers. A mortgage document is a common type of Security, in which property is used as Security for a loan. If the Credit Facilities are not repaid, the bank’s position is “secured”, which means that it can sell the assets to meet the outstanding debts.

Special Answers

Customer requests for prompt clearance of cheques, usually subject to a fee.

Stop Payments

A term commonly used to describe the stopping of a cheque or some other types of payments.

Term Deposits (Investments)

A contract between a customer and a bank, whereby the customer lodges a deposit with the bank for a mutually agreed period of time. Banks pay a set rate of interest on these deposits. If the customer wishes to access funds before the maturity date, there may be a fee charged and/or interest penalty for breaking this contract.

Third-Party Security

Security provided by a person who is not the borrower.

Travellers Cheques

Specially printed cheques available for Customers to purchase, usually for use overseas, to obtain cash and pay for goods or services. Travellers Cheques are available in fixed amounts in a number of major world currencies. Security is maintained by signing the cheque at the time of receipt and adding a second matching signature on presentation for payment. A commission is generally payable on the purchase of these cheques.

Unauthorised Transactions

Items recorded on an account that have been made without the customer’s authority.

Variable Rates (also known as “Floating Rates”)

Rates of interest that may be changed during the period of borrowing. Often Variable Rates on borrowings by Customers are linked to a bank’s base (or prime) rate.

Withholding Tax (Resident (RWT) and Non-Resident (NRWT)) and Approved Issuer Levy

Government taxes on interest income that banks and other interest payers must deduct from interest payments to residents and non-residents.

11.2 principal legislation and international banking standards

Principal Statutes Governing Banking in New Zealand

Bills of Exchange Act 1908
Cheques Act 1960
Companies Act 1993
Consumer Guarantees Act 1993 (does not apply to business Customers)
Credit Contracts Act 1981
Credit Contracts and Consumer Finance Act 2003
Criminal Records (Clean Slate) Act 2004
Electronic Transactions Act 2002
Fair Trading Act 1986
Financial Transactions Reporting Act 1996
Human Rights Act 1993
Investment Advisers (Disclosure) Act 1996
Lawyers and Conveyancers Act 2006
Minors’ Contracts Act 1969
New Zealand Bill of Rights Act 1990
Partnership Act 1908
Personal Property Securities Act 1999
Privacy Act 1993
Proceeds of Crime Act 1991
Property Law Act 1952
Protection of Personal and Property Rights Act 1988
Reserve Bank of New Zealand Act 1989
Securities Act 1978
Securities Markets Act 1988
Terrorism Suppression Act 2002
Unclaimed Money Act 1971

Statutes Providing Access for Third Parties to Customer Information Held by Banks

Administration Act 1969
Child Support Act 1991
Commissions of Inquiry Act 1908
Companies Act 1993
Customs and Excise Act 1996
Fair Trading Act 1986
Fisheries Act 1996
Financial Transactions Reporting Act 1996
Gaming Duties Act 1971
Goods and Services Tax Act 1985
Health and Disability Services (Safety) Act 2001
Income Tax Act 2004
Incorporated Societies Act 1908
Industrial and Provident Societies Act 1908
Insolvency Act 1967
Law Practitioners Act 1982
Mutual Assistance in Criminal Matters Act 1992
Proceeds of Crime Act 1991
Public Finance Act 1989
Reserve Bank of New Zealand Act 1989
Securities Act 1978
Serious Fraud Office Act 1990
Social Security Act 1964
Student Loan Scheme Act 1992
Summary Proceedings Act 1957
Tax Administration Act 1994
Terrorism Suppression Act 2002

International Accepted Banking Standards

International Chamber of Commerce setting out Uniform Rules for Collections.
International Chamber of Commerce setting out Uniform Customs and Practice for Documentary Credits.
ISDA - International Swap and Derivatives Association, Inc.