Court of Appeal Sides with BNZ in Gloriavale ‘Debanking’ Case

1 May, 2025

Words by Rochelle Farmer and Emma Mahony

The recent Court of Appeal decision involving the Gloriavale Christian Community (Gloriavale) and the Bank of New Zealand (BNZ) provides a strong affirmation of contractual rights between banks and their customers. It also adds to the growing conversation around access to banking in a digital, and increasingly cashless, society.

Background

In 2022, BNZ attempted to close accounts associated with Gloriavale. This decision followed serious findings by the Employment Court in the Courage case, where it was held that Gloriavale had employed children as young as six in dangerous, unpaid work—actions incompatible with BNZ’s internal human rights policy.

Although BNZ’s standard terms and conditions gave it the right to close accounts “for any reason,” Gloriavale challenged the decision in court, arguing the bank had breached its contractual and fiduciary obligations. Gloriavale argued the closure would mean they were unable to make payments for food, rates, medical care, and clothing for their members and they had no other banking option immediately available to them.

In 2022 the High Court granted Gloriavale interim injunctions, preventing BNZ from ending the banking relationship (see our previous article on the High Court decision here). However, BNZ appealed the decision—and the Court of Appeal has now set aside those injunctions.

BNZ’s Legal Position

BNZ maintained that the only reason for terminating the accounts was the serious conduct outlined in the Courage case. The bank pointed to clause 8.2 of its standard terms, which explicitly allows it to end a banking relationship unilaterally and “for any reason.”

Gloriavale’s Argument

Gloriavale claimed that this clause must be read in light of other provisions and implied terms, and that BNZ’s decision was effectively unreasonable. It also argued that BNZ had assumed fiduciary obligations and should have acted in Gloriavale’s best interests. However, the Court of Appeal firmly rejected these arguments.

Court of Appeal Decision

The Court held that there was no serious question to be tried in relation to any of the claims advanced by Gloriavale. It emphasised:

  • There was no implied limitation on BNZ’s ability to terminate accounts, and any attempt to read such a limitation into the contract would contradict its express terms.
  • Courts cannot impose obligations under the guise of interpretation where the parties have not agreed to them.
  • The suggestion of a fiduciary relationship was “misconceived” and unsupported by precedent. A bank-customer relationship is contractual, not fiduciary.

Justice Goddard noted that while the loss of banking access could significantly impact Gloriavale, this did not override BNZ’s contractual rights—especially when exercised for ethical and policy-based reasons consistent with its internal standards.

To soften the immediate impact, BNZ offered to continue banking services for a further three months from the date of the Court’s decision, to allow Gloriavale time to seek alternative arrangements.

Access to Banking

While the legal outcome is clear, the case raises deeper questions about the role of banks in society—particularly around access to financial services and the emerging risk of “debanking.”

Are We Ready for a Cashless Society?

Events like Cyclone Gabrielle highlighted the continued importance of cash as a means of payment in emergencies. In power outages, EFTPOS and online banking often fail. In this context, moving toward a fully cashless economy raises concerns about resilience and accessibility.

Moreover, many New Zealanders still face barriers to banking—including lack of fixed address, digital literacy, or technology access. These challenges are even greater for vulnerable groups such as the homeless, former prisoners, and those with mental health challenges.

Australia is introducing a mandate requiring some shops selling essential items to accept cash from 2026, and the Reserve Bank is not ruling out a policy response to safeguard cash in New Zealand, either.

Is Access to Banking a Right?

Globally, there’s growing recognition that access to basic financial services may need to be treated as a human right. As of 2021, the World Bank estimated that 1.7 billion people remain unbanked. In New Zealand, banking services are crucial to participating in society safely and legally—but they’re not guaranteed.

Some jurisdictions have taken proactive steps:

  • Canada requires banks to open basic accounts even if the applicant is unemployed, bankrupt, or has no money to deposit.
  • The European Union grants all residents the right to a “basic payment account,” unless anti-money-laundering concerns are triggered.
  • The UK operates initiatives helping incarcerated individuals open accounts before release. In New Zealand, Westpac’s “New Start” program is currently the only similar effort.

Banking, ESG, and Potential Law Changes

Tension can arise between a bank’s ESG (Environmental, Social, and Governance) commitments and customer rights. BNZ’s reliance on its human rights policy in this case highlights the increasing role of ethical standards in financial services decisions.

However, a Bill introduced by NZ First, nicknamed the “Woke Banking Bill”, may soon test those boundaries. The Financial Markets (Conduct of Institutions) Amendment (Duty to Provide Financial Services) Bill would require financial institutions to serve customers unless there is a valid commercial or legal reason not to. It explicitly prohibits refusal of services based on:

  • Political or ethical beliefs,
  • Environmental or social considerations,
  • Industry type (e.g., firearms, fossil fuels), or
  • Climate-related reporting standards.

If passed, the Bill would significantly constrain banks’ ability to “debank” clients for reasons tied to ESG policies—marking a major shift in the financial landscape which has been moving toward greater disclosure of ethical and environmental considerations in recent years.

Conclusion

The Court of Appeal decision is a timely reminder that banks can lawfully end relationships under clear contractual terms—even when doing so has far-reaching consequences. But the legal right to terminate services does not answer the societal question: should access to banking be a basic right?

As New Zealand and the world navigate toward a more digital economy, that question is likely to remain at the forefront of financial regulation and public debate.

The case serves as a reminder to both businesses and individuals to carefully review and understand the terms of their banking agreements—and to be aware that banks may exercise their right to end relationships based on ethical policies or reputational concerns—at least for now.