Banker has the responsibility to keep its customers’ affair secret. However, this duty is not absolute and disclosure of information regarding the customers is permitted in the following circumstances as stated is the case of Tournier v National Provincial and Union Bank of England [1924]. In Tournier’s case, Bankers LJ had expressed that the duty of secrecy is not absolute but qualified. These four exceptions are as follow:
i) Where the disclosure is under the compulsion of law
A bank may be compelled by law to disclose the information of its customer’s account in legal proceedings. (Beverley Lacey, Jonathan Speck, 2009) For example, to follow an order under the Bankers’ Books Evidence Act 1879 in civil proceeding. In criminal proceedings, orders can be made for the purpose of investigation under the statutes such as Anti- Corruption Act, Kidnapping Act and others. Court orders including subpoena or witness summons, writs of sequestration and also garnishee order.
Cases: Parry-Jones v Law Society, Robertson v Canadian Imperial Bank of Commerce.
ii) Where there is a duty to the public to disclose
In Tournier’s case, judges agreed that duty to the public would overweigh the duty of confidentiality. For example, if there is a notice of terrorist connection, on the ground of public interest, bank is bound to disclose to the authorities the information about its customer’s dealings with the terrorist accomplice. This means that the banker has a higher duty to prevent fraud or crime in order to avoid serious harm to the public. (Beverley Lacey, Jonathan Speck, 2009) However, the disclosure must be limited to the reasonably necessary to achieve the purpose of public interest. Besides, a bank also needs to balance between the public interest and the customer’s right to privacy when it considers providing information of customer to a third party.
Cases: Initial Services LTD v Putterill, Libyan Arab Foreign Bank v Bankers Trust Company
iii) Where the interests of the bank require disclosure
This will occur when a bank takes legal action against its customer, or defends from the customer. For instance, when a bank pursues the customer’s debt through court action, this will require the bank to provide information regarding the customer’s affairs. In Tournier’s case, Bankers LJ gave an example of justifiable disclosure such as when a bank states the amount of an overdraft on the face of the legal document issued by bank to claim payment of the overdraft. (Beverley Lacey, Jonathan Speck, 2009)
Case: Hassneh Insurance Co. of Israel v Mew Coleman J.
iv) Where the disclosure is made by the express or implied consent of the customers
A bank is allowed to disclose customer’s information if the customer gives permission to the bank. However, the bank must ensure the accuracy of the information and it is within the scope of customer’s consent. A customer’s consent can be expressed or implied. Express consent must be in writing, indicating specifically the purpose for which the consent to make disclosure has been given whereas the implied consent is a reference a bank might requested from the customer to provide to the third party on the customer’s behalf. (Beverley Lacey, Jonathan Speck, 2009) For example, if a customer agrees the banker to discloses the information of his personal account but the banker discloses his joint account’s information, then the banker is considered breach its duty of confidential.
Case: Sunderland v Barclays Bank Ltd
Statutory Duty
Other than the exceptions in Tournier’s case, in Malaysia, Banking and Financial Institutions Act 1989 (BAFIA 1989) also has the same exemptions in Section 99 of BAFIA 1989 which have brought similar impacts to the duty of secrecy. The duty of confidential is not absolute and disclosure is permitted in the following circumstances:
a) The customer or his personal representative has given permission in writing to disclose – Section 99(1)(a) of BAFIA 1989. (LawNet, 2006) This means that the disclosure of information can be made only if there is an “express consent” from the customer. In other words, “implied consent” is not allowed in Malaysia, as opposite to the Tournier’s principle because it is too subjective and may give rise to different inference and interpretation.
b) The customer is declared bankrupt – S99(1)(b). (LawNet, 2006) Disclosure is permitted when the customer is declared bankrupt or a company has been wound up. In both situations, the court can summon bank officer to disclose the information of the customer’s affairs and other relevant documents. This exception is supported by section 31(1) of the Bankruptcy Act 1967 and Section 249(1) together with S249(3) of the Companies Act 1965.
c) The information required is to assess the creditworthiness of the customer and that information required does not enable the details of the customer’s account or affairs to be ascertained – Section 99(1)(c). (LawNet, 2006) Information can be disclosed when it is required by a bona fide or prospective bona fide commercial company to assess customer’s creditworthiness relating to a transaction. This will increase the confidence towards the company if the reply from the bank is sound and vice versa. Therefore, bank must be very careful when making such disclosure.
d) For the purposes of any criminal or civil proceedings – S99(1)(d). (LawNet, 2006) Section 99(1)(d)(i) states that bank can disclose customer’s information when it involved the proceedings between the bank and its customer or his guarantor. S99(1)(d)(ii) allowed disclosure when involved proceedings between bank and two or more parties making adverse claims to money in customer’s account where the bank seeks relief by way of interpleader. (Lex Mundi Ltd, 2007) (Beverley Lacey, Jonathan Speck, 2009)
e) Banker has been served a garnishee order attaching monies in the account of the customer – S99(1)(d). (LawNet, 2006) Disclose customer’s information by way of Garnishee order may breach the duty of confidentiality to the customer, but it can be considered as “public interest”, whereby it is needed to give justice and recourse to the customer’s creditors when the customer fails to repay the sum due.
f) To an external bureau established, or to an agent appointed, by the licensed institution with the prior written consent of the Bank – S99(1)(f). (LawNet, 2006) Bank can establish an external bureau or appoints an agent at any time to probe into customer’s confidential information without the knowledge of customer.
g) Where such disclosure is authorized by BAFIA – S99(1)(g). (LawNet, 2006) Duty of confidentiality can be set aside when the disclosure is authorized under any other provision of BAFIA.
h) Where such disclosure is authorized by Federal law – S99(1)(h). (LawNet, 2006)Disclosure can be made to a police officer in order to investigate any offence under the law and such disclosure is limited to the accounts and affairs of the person being suspected to the offence.
i) Where such disclosure is authorized in writing by the Bank Negara Malaysia – S99(1)(i). (LawNet, 2006) (Lex Mundi Ltd, 2007) Central Bank has the power to authorize disclosure of information. For example, Central Bank may require any bank to submit customer’s credit information for credit bureau.