A Consumer Council survey has uncovered a dismal high percentage of banks disclaiming liability for any loss or damage of the contents of safe deposit boxes while under their custody.
Out of 21 banks which responded to the Council's request for supply of terms and conditions last month, 16 (76%) indicated in the service contracts that they shall not be held liable for such loss or damage.
The remainder five banks agreed to be responsible but only if the loss is proved to be caused by the bank or the negligence of staff. The extent of responsibility varied from setting the upper limit of their liability at $1,000 (3 banks), to an amount equal to one-year rental (1 bank), to no pre-set limit (1 bank).
The Consumer Council is gravely concerned over the inclusion of such clearly outdated and harsh terms and conditions in the standard service contracts drawn up by banks for consumers.
The Council is of the view that exemption clauses are governed by the Control of Exemption Clauses Ordinance (Hong Kong Law Chapter 71), which stipulates that in the case of loss and damage other than death or personal injury, "a person [a legal entity] cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness".
As such, even though a contract consisting of exemption clauses(s) has been signed, the consumer should still be able to hold the bank liable for the loss arising out of negligence.
The Council has been assured that improvement is in the pipeline to rectify the situation in the foreseeable near future.
First, the Hong Kong Monetary Authority has requested Authorised Institutions to review their terms and conditions for safe deposit box service, and the Code of Banking Practice Committee to explore how the current practice in relation to Authorised Institutions' use of exemption clauses can be improved under the context of the Code.
Second, the Hong Kong Association of Banks has also set up a special task force to provide Authorised Institutions with the best practice recommendations in relation to the operation of safe deposit boxes.
Furthermore, the Council is also critical of the lack of public access to adequate information on safe deposit box service.
For instance, as part of the survey, most of the 19 banks approached by staff of the Council posing as prospective customer would only provide information on the sizes and charges of the boxes in a particular branch, and other charges such as replacement of lost key and the forced opening of a safe deposit box. Only two could provide a copy of the terms and conditions of service. Online information in this banking service is also scanty.
On the issue of taking out insurance for the contents of safe deposit boxes, the survey showed that only eight (38%) of the banks saw the need to advise, in the terms and conditions of contracts, the renters to purchase insurance.
Consumers are advised to consult the survey report in this November issue of CHOICE for further guidance in the selection and use of safe deposit service.
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