BNZ has been trying to to terminate its 40-year banking relationship with the reclusive religious community since 2022. Photo: RNZ / Jean Edwards
Gloriavale is being held accountable for poor behaviour with its loss in its fight to keep banking with BNZ, the Gloriavale Leavers' Support Trust says.
BNZ has been given the green light to cut its ties with Gloriavale, with the Court of Appeal disposing of an injunction preventing the bank from closing accounts related to Gloriavale's various businesses and entities.
Gloriavale now has three months to tidy up its affairs with BNZ.
BNZ wanted to terminate its 40-year banking relationship with the reclusive religious community in 2022, arguing that an Employment Court ruling which found the sect had used child labour breached the bank's human rights policy.
Gloriavale was unsuccessful in trying to establish alternative banking arrangements, and the High Court granted it an interim injunction preventing BNZ from shutting the accounts.
The Gloriavale entities said that without bank accounts, the continued existence of the community would be at risk.
Liz Gregory - the manager of the Gloriavale Leavers' Support Trust, which helps people who choose to leave Gloriavale - said the Court of Appeal ruling was hugely significant.
"BNZ has clearly recognised there's been some concerns about Gloriavale and their activities and they want to distance themselves from it," she said.
"I guess it's right and fair that if you have a business you choose who you do business with, so I guess this is just a case of consequences for poor behaviour."
Gregory said the ruling showed the importance of the landmark child labour decision in 2022, which prompted BNZ to try and cut ties with Gloriavale.
The Employment Court found that three former Gloriavale men, who worked long hours in the community from the age of six, were employees, not volunteers.
"Here we have another court ruling sitting on top of that one and so I think we're starting to get a compounding effect here and I think it's just continuing to highlight Gloriavale's past activities that they need to be held accountable for," Gregory said.
Associate professor Claire Matthews, a banking expert from Massey University Business School, said the ruling reinforced the fact that legally banks could decide, in a reasonable way, to not bank a particular organisation.
"Fundamentally the banks have to be able to say 'we won't bank somebody' if it is a problem. So if they're doing something illegal, or if they breach their ethics effectively, they shouldn't be forced to bank somebody that is basically going against their moral code," she said.
Matthews said if somebody was rejected by a bank, it could be hard to get a bank account somewhere else.
"Arguably if Gloriavale is operating in a way that is considered if you like immoral or whatever, and so therefore banks don't want to bank you because of that, then maybe you actually have to think about should you still be operating," she said.
Gloriavale previously said that the community had not breached BNZ's terms and conditions and the closure of their accounts would be devastating for people who lived there.
But Gregory was dubious that this would see Gloriavale wind up its operations
"We all know that Gloriavale is adept at surviving so I think it's a bit premature to say how it will play out... I think that Gloriavale is likely to have a plan up their sleeve - that's what most leavers think, there will be potentially some kind person out there offering to do banking for them, third party, I wouldn't put that out of the realms of possibility at all. I don't imagine they're going to pull all the cash out and stick it in their mattresses," she said.
The Court of Appeal ruling - released on Monday - said there was no proper basis for requiring BNZ to continue to provide services to the Gloriavale entities.
"We do not consider that it would be in the overall interests of justice to grant an injunction requiring BNZ to continue to provide services to the Gloriavale entities for a further period (likely to be in excess of a year) until the claims could be tried. BNZ's appeal must therefore be allowed," the court said.
"Setting aside the injunction and allowing BNZ's decision to take effect would not of itself prevent the Gloriavale entities from obtaining banking services - it would simply remove one provider as an option, in a market where there are multiple providers of banking services. The Gloriavale entities would remain free to seek to open accounts with other banks.
"If no other bank is willing to accept the Gloriavale entities as customers, that reluctance cannot be laid at the door of BNZ."
The Court of Appeal said BNZ agreed that it would continue to provide banking services to Gloriavale for a period of three months from the date of the court's decision.
Gloriavale has been approached for comment.