In Malaysia, according to the Malaysian Banking Law, employees of banks are described as "bankers". Under the Malaysian Banking Law, the term "Bank" or "Banker" is defined in the Banking Act of 1973 as "any person who carries on banking business". In Malaysia, banker also can defined as the persons who engage in the business of banking by receiving money on deposit, buying or selling bills of exchange, promissory notes, bonds or stock, or other long-term and short-term securities, and by lending money without being incorporated.
On the other hand, there is no any specified definition of the term "customer" in any of the key legislations governing banking business in Malaysia. However, there is one of the local case which deals with the question of whether a person could be treated as a customer for the bank. In the case of "Oriental Bank of Malaya v. Rubber Industry (Replanting) Board", it was held that at the moment a person has his money accepted by a bank on the understanding that he may draw cheques up to the amount standing in his account with the banker, that person is regarded as the latter's customer.
Duties of banker
One of the duties of banker in Banking Malaysia is duty of secrecy. According to common law, there is a contractual duty on the banker, which is they are not allow to disclose customer's information to any third parties. In Malaysia, bank cannot make any unauthorized disclosure under statutory obligation. In the case of "Tournier v National Provincial and Union Bank of England [1924] 1 KB 461", Court of Appeal unanimously concurred that the duty of secrecy is contractual in nature and is to be implied from the banker-customer relationship.
According to Banking and Financial Institution Act 1989 (BAFIA), S97 (1), it states the main pillar and bone of the duty of secrecy. Generally, it imposes a strict duty on the directors or officers of the bank, any external bureau or agent of a bank and 'any other persons' such as accountant, lawyer or polices who have access to the customer's information to maintain confidentiality. The directors, officers, external bureau and agents of a bank are restricted from making any unauthorized disclosure during and even after their tenure of employment; whilst for those having access to that information must preserve the secrecy perpetually. The person would be held liable if the confidentiality of the bank's customer is divulged to third party.
Furthermore, duty of confidentiality is also safeguarded in other banking statutes. For example, Section 16 of the Central Bank of Malaysia 1958, it prohibits all its officers from disclosing any information relating to the affairs of bank and its customers to third party.
There are some exemptions of the duty of secrecy:
Dilution: Exceptions under Banking and Financial Institutions Act 1989 (BAFIA)
Customer's Consent
According to section 99(1)(a) of BAFIA, disclosure is allowed when customer or his representative has given permission in writing.
Bankruptcy and Liquidation
According to section 99(1)(b), disclosure is allowed when the customer is declared bankrupt or a corporation is being or has been wound up and liquidation.
Banker's References
According to section 99(1)(c), it allows disclosure where the information is required by a bona fide or prospective bona fide commercial company to assess the creditworthiness of the customer relating to a transaction.
Litigation between Bank & Customer or Third Party Claimants
Pursuant to section 99(1) (d) (i), the bank can disclose the customer's information when it is involved in the proceedings with its customers or guarantors relating to the customer's transaction with the bank. Section 99(1) (d) (ii), banker may be involved in litigation between the customer and a third party since the property in dispute might be kept by the bank.
Garnishee Proceedings
According to S99 (1) (e), disclosure is allowed where the bank has been served with a garnishee order attaching monies in a customer's account.
Disclosure by Federal Law to Police Officer
Pursuant to section 99(1) (h), there is no secrecy in cases where disclosure is made compulsion under the relevant Federal Legislations. The bank can, bypassing the consent of customer, disclose the information to a police officer investigating an offence specified in those laws.
In addition, the banker must consult their customer by their professionalism and all of their knowledge in order to assist the client to a better financial position. Since they will not only be dealing with customers but individuals from other financial entities and organizations as well. Therefore, it is important that the banker has a great deal of professionalism. Bankers need to provide their professional financial advice to their clients. Bankers need to communicate regularly with clients either through calling or finding answer for customers. Besides, bankers should inform their customers the way that they can achieve their desired financial status by review the financial status of their clients. Bankers need to disclose all the information and data that they know and found to their customers. In the case of Barclays Bank plc v Quincecare Ltd [1992] 4 All E.R, if a bank executes an order knowing it to be dishonestly given, or shuts its eyes to an obvious fact of dishonesty, or acted recklessly in failing to disclose any information to his or her client, the bank can be sued. There is a valid contract between the bank and the customer.
Furthermore, banker also responsibility collect cheque as collecting banker. Banker helps his customer collect cheques and present to paying banker. After that, banker will credit the money to customer's account. In the other hand, banker also as the paying banker follows customer's order. Banker will pay the amount acquired to the customer's creditor during the banking hours.
Duties of Customer
Under Malaysian Banking Law, customers have their own vital duties that need to follows. Firstly, as the customers of the bank, they should follow the policies that have been set by the bank. According to the sequence of becoming the customer of bank, there have terms and conditions that needed to be agreed by both of the parties before they enter into the legal relationships. Therefore, every customer and banker has a contractual obligation which is not allowed to breach.
Beside this, the customers of bank also need to carry out their duty of care towards the bank. The duty of care including protect the bank property or bank check book. Furthermore, customer also bears the duty to report fraud, forgery or any negligence in relation to his or her bank account. Report of fraud needed to be done immediately without any delay. Customers also require to being careful while drafting cheques to avoid the any of the fraud that could be happened. If the customers fail to accomplish their duty of care, any claim for loss is not allowed. In the case of "Greenwood v Martins Bank Ltd.", it was held that the customer was breaching their duty of care to the bank if they remained silent about a forgery and thus, allowed the forgery to escape. In such a situation, the customer cannot claim from the bank the money paid by the bank in the forged cheques.
A customer also need to present cheques for payment and collection transaction during the working hour of bank. He or she should wrote the right amount on the cheques and need to be very carefully in such a way that there is not allowed for any fraudulent practice. Beside this, customer also should keep his or her cheque under a secure location and present the cheques for payment before the cheques holding by them become outdated. If customers find any forgery or fraud in the amounts of the cheque issued by them, it is their duty to give the warning to the banker who responsible for that at the earliest opportunity.
On the other hand, a customer has right to draw cheques against his or her credit balance. Customers also have the right to receive pass book from the bank other than that. Customer can apply specific performance against the bank if the bank has not maintained the secrecy of his account. If the customer leak out the highly confidential information of the bank, the bank can sue the customer anyway.
There are two basic forms for customer in terms of financial institution which are borrower and depositors. In terms of depositors, customers of the bank are required to follow every rules and regulations preserve by the banks. However, for the customer in terms of borrowers, they must pay the fees every month which also including other charges in time along with the settlement of principle amount besides following the rules and regulations. Other than this, they should also provide their income statements as well as other valid documentation on time when demanded by the bank. They should not deceive the bank in anyway.
In the case of "United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd", it also mentioned about the duty of customer. This is an appeal by United Asian Bank Bhd against the decision of Zakaria Yatim J, given at Kuala Lumpur on 4 June. Wong Chow Seng ('Wong') was the respondent's accounts clerk, cleverly forged several cheques of the respondent drawn on the appellant bank. All these cheques were honoured by the appellant and the respondent's account with it was debited in consequence. Wong was not an authorized signatory to negotiable instruments, including cheques, drawn by the respondent on the appellant. In its defense, the appellant specifically denied that the signatures on the impugned cheques had been forged.
Banker and customer relationship
The relationship is contractual in nature once the customer has open account in the bank but there is no formal agreement. The most important part is when customer signing of a specific of a specimen signature card when they open account. The relationship between banker and customer is important to entitle that each party has their right and obligation.
The relationship between banker and customer can be divided into two, which are general relationship and special relationship. The relationship between banker and customer from the view of general relationship is debtor and creditor. When customer deposit money in bank or borrow money from bank, they play their role. From the view of special relationship, customer play principle role when he deposits cheque, drafts, dividends for collection with the bank, while bank perform agency services.
Reference for Question Four
Duties of banker
http://www.elawyer.com.my/blog/wp-content/uploads/amended-banking-law.doc
Duties of customer
http://www.blurtit.com/q885148.html
Definition of the terms of "customer" and "banker"
http://www.google.com.my/url?sa=t&source=web&cd=6&ved=0CDkQFjAF&url=http%3A%2F%2Feprints.ptar.uitm.edu.my%2F627%2F1%2FSHAMSUL_BAHRIN_B_BAHARUDDIN.pdf&ei=XMijTbTFNITprAel98GBCg&usg=AFQjCNFZcyGrS9F6mPdZl4sqh8_rJjVl7g
Case of "United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd"
http://www.ipsofactoj.com/archive/1992/Part05/arc1992(05)-006.htm
