Sunday, February 3, 2008

SRO Enforcement Committee meets with Bank Negara

Contributed by Ong Siew Wan (Malaysian Bar)

Saturday, 02 February 2008 08:34am

KUALA LUMPUR: The Bar Council Solicitors Remuneration Enforcement Committee represented by its Deputy Chair, Ong Siew Wan, Committee members Hj Abdul Murad, Loh Wann Yuen, Sumathi Murugiah and Sally Chee Lai Yan met with the executive officers from the Consumer and Market Conduct Department of Bank Negara Thursday, January 31 at Bank Negara for a fruitful discussion on the Solicitors’ Remuneration Order 2005 (SRO 2005).
The Bank Negara was represented by the Director of the said Department, Koid Swee Lian, its Deputy Director Ooi See Eim, Ropingat, Tham and Yazid Awang.
The dialogue was to address the issue of financial institutions "inciting" their panel solicitors to breach the “no-discount” rule in breach of the SRO 2005.
The Bank Negara acknowledged that the no-discount rule has the force in law and it must be complied with and that they are ever ready to cooperate with the Bar Council to uphold such regulation. The SREC also informed the Bank Negara that the Bar Council has received numerous complaints from legal firms stating that some of the branch offices of certain financial institutions have been requesting them to offer discounts on non-contentious matters. Solicitors who give discounts would then be committing a breach of the SRO 2005 and that would render them liable to disciplinary proceedings.
The SREC also brought up several issues including some financial institutions only allowing a few selective panel solicitors to handle those “free legal fee” or “zero entry cost” loan documentations though there are other panel solicitors available. Some banks also fixed the amounts of disbursements that can only be charged by the solicitors contrary to the SRO 2005. More often than not, such situations occur in the Klang Valley, Johor Bharu and Penang.

The officials then suggested that SREC write to Bank Negara and lodge a complaint with the specific breach of the financial institutions. The Bank Negara will then track their conduct and take action against the specific branch.

The Bank Negara has also agreed to look into all the complaints and is most willing to work hand in hand with the Bar Council to ensure compliance of SRO or any law in Malaysia. The Bar Council officials were also advised that any complaint letter written to the particular financial institution could be copied to them so that they could also do their part to liaise with the said financial institution.

The issue of certain financial institutions claiming privilege under Banking and Financial Institutions Act (BAFIA) in refusing to divulge information of the solicitor handling their matter when the Bar Council received a complaint was also discussed. It is learnt that it is not a breach of BAFIA to disclose the name of the solicitor handling the matter.

The SREC also requested the assistance of the Bank Negara enforcement unit to audit the financial institutions' accounts to find out the amount of legal fees they paid to the solicitors for doing non-contentious matters and to provide the Bar Council with the information to enable the Bar Council to tally the payments received by the solicitors.

The Bank Negara said it is quite willing to do so if the Bar Council could provide specific case to them and the period the said transactions took place. The members will report back to the SREC so that a mechanism can be formulated with Bank Negara.

- Kami di Termizi & Co. menyokong saranan supaya Bank Negara menyiasat sesetengah bank yang telah menetapkan cara pengiraan disbursement yang boleh dituntut oleh peguam kepada mereka untuk kes "Zero Entry Cost" padahal cara pengiraan yang diberi adalah tidak selari dengan Solicitors' Remuneration Order 2005.

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