Read the passage and answer the following questions:
Internet banking is A potential legal nightmare, “there can be as many as 200 legal systems with which anyone internet banking transaction may have to comply, most jurisdictions don’t recognize online contract formation and internet retail banking could cost your bank billions in customer claims, “says Mark Lewis, Partner at Arnheim Tite & Lewis, Price water house Cooper’s UK correspondent law firm.
Lewis adds: “you UK internet banking transactions will need to comply with the Banking Act 1987 and regulations made under it such as the Banking Act (Advertisement) Regulations 1988, as well as the Financial Services Act 1986 and the regulations made under, it the Consumer Credit act 1974 and the regulations made infer it the code of conduct for the Advertising of interest – Bearing Accounts, the Banking Code of Practice, the Unfair Contract Terms Act 1977, the Unfair Terms in Consumer Contracts Regulations 1994, the UK law implementing the proposed Directive on Distance Marketing of Financial and the proposed Directive on Certain Legal Aspects of Electronic commence in the Internal Market – and that’s just in the UK.”
Despite the difficulties, Lewis remains bullish, “Banks operate in A highly regulated market, but e-business is happening anyway. Can you afford to hold back while you worry about all of those 200 jurisdictions whose legal systems could stand in the way? It’s true that there are lots of legal barriers but you can find your way around the same and minimize others.”
There are four principal areas of concern for anyone seeking to enter the e-banking market. The first stems from the recognition that A bank cannot go to it alone. “Apart from banks, the parties involved include network and communication providers, technology platform providers, retailers, consultants, internet service providers and so on,” says Lewis, “the key is to decide how such interests should be represented and the optimum number to make A joint venture vehicle workable bearing in mind the go-to-market time for e-business projects.”
Next is the need to overcome systemic legal barriers. This is the risk that legal systems do not recognize, or else create uncertainty in banks’ legal rights and responsibilities or the effectiveness of e-banking transactions, “says Lewis.
There are new laws or initiatives on the stocks that will tackle some of these barriers. They include the proposed EU electronic commerce directive mentioned above, the UK electronic commerce bill and A proposed EU digital signatures directive. Then there is the service dependency/ liability risk- that you and your e-banking joint venture partners could face greater responsibility or liability than you should either because you have accepted it or because it is imposed upon you. “ you need to establish clear terms of engagement, allocating wish between parties setting out the service dependencies and limiting parties ‘ liability for direct and consequential losses”, says Lewis. But the challenge is to make e-banking A worthwhile proposition for the customer.
The final component is the regulatory environment. “ The regulatory environment presents two types of risks that laws either in place or to be enacted will severely hamper your ability to undertake e-banking and the risk that you will underestimate the impact of those laws or the time it can take to manage them.”
By way of example. Lewis points to the litany to the litany of UK regulations quoted above. “Again, some regulations can be overcome while some can’t Assess the regulatory requirements at the outset; allow time than you can possibly have imagined and structured your e-banking business to gain regulatory approval. If you can’t then seek official opinions or other comfort or else work well within the limits of your proposed project or trade and be prepared to restructure it falls within the legal limits.” In short as with all massive advances in the way we live and do business, the law may be slow to catch up but that isn’t a reason for not participating.