Good banking practice
I General principles
The goal of Good Banking Practice is to set out in writing the principles that Estonian credit institutions and branches of foreign credit institutions (hereinafter collectively referred to as “banks”) proceed from and which contribute to better mutual understanding and fair and free competition, and ensure the reliable functioning and good reputation of the entire banking system.
By publishing Good Banking Practice, banks wish to emphasise the importance of good practices and professional ethics and to notify customers, employees and other interest groups that the bank follows good banking practices.
Good Banking Practice was approved by the board of the Estonian Banking Association (hereinafter referred to as Banking Association). The Banking Association board supplements and updates Good Banking Practice as needed, inter alia as occasioned by changes in the banking sector and the economic and legal environment.
Organising banking activity
Banks shall organise their activity in a transparent and conscientious manner and ensure that bank employees are suitable and sufficiently well-trained for their positions and that their activity is subject to sufficient control, supervision and management.
In organising their activities, banks shall abide by the law, other legislation, their internal rules and agreements between banks and customers, and shall ensure that all bank employees are sufficiently informed of these rules to perform their work as required and adhere to them with the required care and diligence.
The Banking Association and the banks have a philosophy that issues unregulated by provisions of law should be resolved under self-regulated procedure.
If necessary, the Banking Association shall establish additional instructions and standards that further refine the rules for the banking sector.
Banks shall comply with the advisory guidelines issued by the European Banking Federation (EBF) and the European Banking Industry Committee (EBIC), to which the Banking Association has decided to accede.
Banks and society
Banks shall act in a sustainable and socially conscientious manner.
Banks commit to zero-tolerance regarding money laundering, terrorist financing and deviation from targeted international financial sanctions in order to ensure reliability and transparency of financial environment.
Prevention of money laundering and implementation of international sanctions is important to ensure the trustworthiness of banks.
Banks shall promote positive developments in Estonian society and contribute to the growth of the Estonian economy.
Banks and the Banking Association support the professionalism of market participants and development of financial literacy and education for customers.
Banks disclose their dividend policy at their website.
II Relations with other banks
In their mutual interaction and business relations, banks shall adhere to principles of propriety, honesty and mutual respect. This means that banks shall fulfil the obligations arising from agreements they enter into, ensure the adequacy of information exchanged by them and refrain from expressing opinions that can lead to negative conclusions being drawn about other banks.
In their business relationships Banks shall adhere to the principle of fair competition and use only legal and ethical means for outperforming a competitor.
Banks shall refrain from entering into agreements that are prohibited or restricting competition in their intent or consequences.
Notification of the public
Banks shall provide true, fair and sufficient information regarding their activities.
Banks shall follow generally accepted marketing principles. In advertising and promotional activity, banks shall provide a true and fair view of their activities and services. In their advertisements, banks shall not make untrue claims or disparage competitors.
Banks and politics
Banks shall not lend support to political movements or parties or other political organisations.
Compliance with Good Banking Practice
The Banking Association assumes that all Banking Association members comply with Good Banking Practice.
The Banking Association board shall give its opinion on cases raised by member banks that can be potentially construed as violation of Good Banking Practice.
A bank which is in conflict with Good Banking Practice intentionally or due to negligence harms its own reputation as well as that of the entire banking sector. In case of violation of Good Banking Practice, the Banking Association may apply appropriate measures. In the case of severe and repeated violations, a bank may be excluded from the list of Banking Association members.
III Relations between bank and customer
Relations between customers and banks are based on mutual propriety, honesty and trust.
Bank employees shall take into consideration the legitimate interests of all parties.
Using the risk-based approach the banks are entitled to decide, which customer due diligence measures to apply. The banks may decide the scope and content of information to be obtained from the customer. The banks are entitled to not establish or terminate any business relationship using the risk-based approach.
Bank employees may not, either by action or omission, or directly or indirectly, compromise the trust between customer and bank. Bank employees are obliged to administer the assets entrusted to them in a professional and trustworthy manner.
Avoidance of conflicts of interest
Banks shall establish codes of ethics and principles for avoidance of conflict of interest and ensure that they are in conformity with provisions of law and good practices, as well as enforce them among their staff. If it is not possible to avoid a conflict of interest, banks shall ensure that such a risk is sufficiently hedged.
Banks shall implement necessary measures so that the personal interests of bank employees do not have a bearing on their decisions made in an official capacity. Bank employees may not take part in the resolution of matters that are related to economic interests of natural persons and legal persons closely related to them.
Bank employees may not accept gifts personally or on behalf of the bank, nor may they incite customers to make gifts that may be construed as bribes in accordance with law or ethical standards.
Safeguarding customers’ assets is of key importance for banks, as a result of which both physical and IT security measures are developed with daily care.
For the purpose of implementing prevention of money laundering and terrorism financing and related international sanctions, banks may refrain from entering into contractual relations with a potential customer or from executing customer transactions.
The right of customers to choose their bank and bank service
Customers have the right to freely choose among banks and bank services offered to them.
Providing information to customers
Banks shall ensure that customers have continuous access to information on the primary bank services, service charges and deposit interest rates offered to them. This information must be presented clearly and understandably in each bank office and branch and on the banks’ websites. Information on the terms and conditions of other bank services shall be provided by banks upon request.
For their part, banks shall make efforts to ensure that information on the fees charged for bank services and interest rates on deposits are available in a manner ensuring that customers have an opportunity to compare similar services offered by different banks.
In communicating this information, banks shall conform to requirements of law as well as additional instructions established by competent authorities.
Banks shall advise their customers based on each specific case, the needs of the customer and the customer’s financial situation. Banks shall give their customers sufficient and professional information, including outlining the risks related to use of a specific bank service.
With regard to lending activities, banks shall act in a responsible manner, contributing to establishing conditions where customers can assess whether a given loan or credit product is compatible with their personal interest as a borrower and their financial situation and which allows to assess the risks related to borrowing.
Resolution of complaints
In interacting with customers, banks shall attempt to avoid and prevent conflict situations. If differences do arise, banks shall prefer extrajudicial avenues of resolution, in a constructive atmosphere of mutual understanding.
Banks shall establish internal rules regarding the lodging of complaints by customers, procedures for reviewing complaints and deadlines for doing so. The terms for reviewing and replying to complaints must be reasonable. Banks shall ensure that all bank employees who have contact with customers are aware of the said rules.
Banks shall ensure that the principles for resolving complaints are available for customers. Bank employees shall provide all manner of assistance to customers in resolving complaints.
Banks shall ensure that customers have access to information regarding whom to contact for extrajudicial solutions, if a customer finds that the outcome of an in-house proceedings at the bank is unsatisfactory.
The Banking Association shall not resolve disagreements between banks and customers.
All information and opinions that were learned regarding a customer – either its own customer or that of another bank – shall be treated as banking secrets. Banks shall implement effective measures for protection of banking secrets based on the strictest principles of confidentiality.
Banks shall ensure that information subject to banking secrecy is available within the bank only to bank employees who need the information in an official capacity.
Banks shall disclose banking secrets to third parties only with the customer’s permission or in cases provided by law.
IV Approval of Good Banking Practice
Good Banking Practice was approved by the Board of the Banking Association in 1996, updated in 2011 and 2017.