Reference no: EM133231097

Banker-Customer Relationship - Problem-based Question Suzette Webster (SW) and Suzanne Arnold are sisters. SW lives in your jurisdiction, while Suzanne lives on Manhatten Island, New York. Suzanne has sent a cheque for US$5,000.00 to SW. SW decides to cash the cheque at the National Bank of (your jurisdiction) Limited, even though she does not have an account there. She goes to the bank on Thursday September 1, 2022. The bank teller, Levy London (LL), a brand new employee who has not yet been fully trained, convinces her to open a savings account at the branch in the capital city. LL is friends with Allisonn Atkins (AA), who recognises SW (who owes her EC$2,000.00 for goods delivered to SW's business place) who asked him "who is the nicely dresssed lady that he attended to before her?". LL tells Allison that the nicely dressed lady is SW, who just opened a savings account. SW returns to the bank a few days later to request a bank draft (cheque) for US$990.00 in favour of The Fabric King, leaving US$10 in the savings account. The draft is for the purchase and delivery of material for her business place on Queen Street, in the capital city. LL did not inform her that the monthly fee is US$15.00. US$15.00 is deducted from the account on the first of every month. LL, on seeing the amount that SW has in her bank account, tells her that the bank has an investment scheme called the Mortgage Participation Fund (MPF) that pays 10% simple interest per month. Based on this information coming from the bank worker, SW decides to invest US$4,000.00 in the MPF. Later that day AA telephones SW to ask for the EC$2,000.00. SW tell AA that she does not have the money. AA angrily calls SW a liar and tells her that she knows for a fact that SW has approximately EC$10,000.00 in her bank account and demands the payment of the $2,000.00. As a result of the deduction of the monthly fee of US$15.00, when the cheque is deposited, SW's account only has $985.00 in it and the bank is unable to honour the cheque because of insufficient funds. The accountant at The Fabric King calls the bank to find out what happened. Rhonda Rivers (RR) tells the accountant that the account had insufficient funds so he should call SW. SW is both aggravated and embarrassed when she receives the telephone call tellig her what RR revealed over the telephone. Eight weeks later, SW logs into her account to see how much interest she has made and how her balance has grown. To her disappointment, she sees that her US$4,000.00 has dwindled to US$1,800.00. She calls the bank to find out where the rest of her money went to and Carol Cruthers tells her that the fund is temporarily in difficulty and that it wil bounce back soon so SW should not withdraw any funds as she will lose money. SW says ok and ends the telephone call. Nine weeks later, SW again logs into her account and sees that her balance has decreased to US$950.00. She calls the bank for an explanation and an update and Donald Dennison (DD) tells her that, due to the poor performance of the fund, it is being closed and her balance of US$950.00 will be transferred to her savings account. SW tells him that she never would have invested in the MPF if she was not encouraged and then convinced by LL that it would be beneficial. DD responds by saying that he is sure that at the time she invested, she was not a customer of the bank.

QUESTION: How can the bank protect itself from liability?