Circular No 111/2018

Dated 26 Apr 2018

To Members of the Malaysian Bar

Meeting with the Association of Banks in Malaysia

The Bar Council (“BC”) Conveyancing Practice Committee (“CPC”) held a meeting with the
Association of Banks in Malaysia (“ABM”) on 4 Jan 2018. Among the issues discussed with
ABM were the following:

(1) Cost of bank’s change of name form or vesting order

(1.1) Pursuant to a circular dated 8 Oct 2003 from Bank Negara Malaysia (“BNM”),
banks were directed to pay the cost for preparation and registration of
documentation for change of name of a bank and for a vesting order
consequent on the merger of banks.

(1.2) BC suggested that affected banks should, from the outset of a transaction,
expressly inform solicitors that the banks would bear the cost of filing of the
change of name form or vesting order. In addition, the banks should not delay
in paying the costs.

(2) Fees charged for banks’ facility documents

(2.1) BC raised the following issues relating to banks’ template documents for credit
facilities:

(a) Solicitors being asked to pay a fee for the documents, which fee varies in
amount from bank to bank;

(b) Solicitors paying such fee even though it is they who incur the cost of
printing the documents; and

(c) Solicitors being asked by some banks not to pass on to the borrowers the
fee paid by the solicitors for the documents.
 (2.2) BC’s position, however, is that:

(a) The charging of a fee by a bank for the sale of facility documents may be
tantamount to a breach of section 37(2) of the Legal Profession Act 1976.
That subsection states that any unauthorised person either directly or
indirectly draws or prepares documents relating to any immovable
property for or in expectation of any fee or gain shall be guilty of an
offence under that subsection.

(b) Such out-of-pocket expenses, if absorbed by a law firm, would be deemed

to be a discount to clients, and thus be in violation of the Solicitors’
Remuneration Order 2005. This may, in turn, implicate the relevant bank
as an aider and abettor of the said breach.

(2.3) Without prejudice to our objection to the imposition of documentation fees,

BC requested that banks minimise such fees.

(2.4) At the meeting, banks agreed to consider allowing solicitors to use the
solicitors’ own template of the deed of receipt and reassignment, as some
banks have a prescribed format.

(2.5) Banks stated to BC that the contents of the facility documents are merely
suggested templates while solicitors remain the final authors thereof.

(2.6) Members are advised to review such documents when preparing them, as the
banks’ position is that Members remain liable for them. If Members intend to
amend any template, they should notify the respective bank(s).

(3) Fees charged by banks for checking facility documents

(3.1) BC objected to the fees that the documentation unit of some banks charge for
reviewing documents prepared by solicitors. The banks’ justification is that
solicitors often make mistakes in documents, thus incurring the banks’ time
and cost in checking the work of solicitors.

(3.2) Members must exercise diligence and extra caution in preparing facility
documents to avoid gross errors, and not delegate the entire work process to
unqualified persons.

(4) Delay in issuing redemption statements

(4.1) BC raised the issue of the delay by banks in issuing redemption statements and
releasing discharge documents.

(4.2) BC referred to a circular issued by BNM in 2010 (BNM/RH/CIR 007-10),

which requires banks to expedite the issuance of redemption statements for
housing loan / house financing, and the release of the original title of
immovable property, in straightforward cases.
 (4.3) The BNM circular requires banks to:

(a) issue the redemption statement for housing loan / house financing within
two working days from the date of receipt of instruction; and

(b) release the original title of immovable property within five working days
from the date of receipt of the redemption sum.

(5) Unclear requests for redemption statements in refinancing cases

(5.1) Members have reported that in cases of refinancing a conventional loan to an

Islamic facility, redemption statements are not sufficiently clear to enable the
party concerned to seek a waiver of stamp duty.

(5.2) Members are urged to specify clearly the items and information required,
when requesting redemption statements from the financiers in such situations.

(6) Notification by banks to solicitors of money disbursed by electronic transfer

(6.1) Pursuant to a joint guideline issued by ABM and BC in 2014, banks are to
notify (or instruct their solicitors to notify) the vendor’s solicitors or, as the
case may be, the purchaser’s solicitors, by email, regarding money disbursed
by electronic transfer, no later than two working days after disbursement.
Please refer to clause 3.2 of the guideline, which was disseminated to
Members in Bar Council Circular No 028/2016 dated 3 Feb 2016 entitled
“Reminder | Guidelines for Interbank E-Payment in Respect of Redemption or
Disbursement of Financing Facilities”.

(6.2) Members have complained that this is often not adhered to.

(6.3) Some ABM members said that the notification is system-generated, and sent
out the same day as the disbursement.

(6.4) Members are urged to inform BC of any late notifications (with full details and
documentary proof) in order for statistics to be gathered.

(7) Bank officers asking for commissions from solicitors

(7.1) Members are urged to report all incidents of bank officers asking them for
commissions. Details of the officers involved should be furnished to the
relevant bank in order for action to be taken.

(7.2) Banks informed BC that there is a complaint procedure on each bank’s

website.

(7.3) Banks also requested that Members not give any gifts whatsoever to any bank
officer, even during festive seasons.
 (7.4) Members are reminded that both BC and ABM view touting as a serious
offence, as per rule 51 and rule 52 of the Legal Profession (Practice and
Etiquette) Rules 1978. Members are also reminded that the practice of sending
gifts to bankers is frowned upon. Members are urged to protect and uphold the
dignity of the legal profession, and to not engage in corrupt practices.

(8) Firms with multiple branches

(8.1) ABM raised the issue of poor coordination between partners in law firms with
multiple branches.

(8.2) Members are reminded that partners of a firm are jointly and severally liable
for all branches.

(9) Quality of solicitors’ work

(9.1) ABM raised the issue faced by its members, of poor turnaround time on the
part of law firms in forwarding and returning security documents, attending to
perfection of transfer and charge, and collecting documents from land offices
or registries.

(9.2) Members are reminded to enhance the quality of their work, and ensure it is of
a high standard.

(10) Solicitors acting for both vendor and purchaser

(10.1) ABM said that its members have occasionally found solicitors acting for both
the developer and the purchaser in the same sale and purchase agreement
under a housing development.

(10.2) Members are reminded to comply with section 84 of the Legal Profession Act
1976. Any advocate and solicitor who contravenes this section may be liable
to disciplinary proceedings.

(11) General

(11.1) On 9 Apr 2018, a few designated CPC members also held an informal
discussion with representatives from BNM with regard to the above-mentioned
issues.

Thank you.

Roger Tan
Chairperson
Conveyancing Practice Committee