Bank Confidentiality Essay

The duty of banking confidentiality in Malaysia has been codified into legislation, namely the Financial Services Act 2013 (FSA) and Islamic Financial Services Act 2013 (IFSA). Banking confidentiality is an important principle in banking law as it ensures the legal rights of a customer have protection of his account and other financial information from being abused and misused. As banking business is based on confidence and good reputation, the duty of a bank to maintain the confidentiality of a customer’s financial information is fundamental and should be ingrained. Central Bank of Malaysia Governor Tan Sri Dr. Zeti Akhtar Aziz said that it was an offence under BAFIA, and now the FSA, for any officer of a bank to disclose any information

Sometimes, mistakes happen, banks end up with releasing information about their customers’ financial affairs which should have been kept secret and confidential. This Article will draw together the optimal balance between the banker’s right to share information for decision making and risk management and the customer’s right to protection of confidentiality/secrecy.

2. COMMON LAW DUTY OF CONFIDENTIALITY

The principles of the duty of confidentiality was laid down in the leading case of Tournier v National Provincial and Union Bank of England, [1924] 1 KB 461. In this case, the court held that a banker owed a qualified duty to keep the affairs of a customer secret and this duty was contractual in nature and was implied from the banker and customer relationship.

This duty of secrecy was subject to 4

In Libyan Arab Foreign Bank v Bankers Trust Co (LAFB)[1988] 1 Lloyd’s Rep. 259, the court found that the public duty qualification might allow for disclosure of customer data to its central bank. In this case, however, LAFB had been unable to demonstrate that any loss or damage resulted from the breach. This has been followed in Price Waterhouse v BCCI Holdings [1992] BCLC 583, where the court found that: “It is allowed for the bank to make disclosure when there is duty to the public to disclose the information.”

c) Where the disclosure is made by the express or implied consent of the customer. In the case of Sunderland v Barclays Bank Ltd it was held that:“The consent of a customer to permit the disclosure of information concerning his account might be implied from the conduct of the customer.”

d) When disclosure is in the bank’s own