Dual agency: whose behalf is the bank acting on?

One institution can have several roles

Wakalah means authorising an agent to perform a delegated task, with or without a fee. Read who appoints whom and the limits of that authority. [WK] The principal is the party giving the authority; here, that is the customer.

BNM’s tawarruq framework permits dual agency within its scope, subject to requirements. A bank can act in its own sale capacity and as its customer’s agent; that does not erase the distinct contracts, ownership steps or payment obligations. [TW]

Follow the role, not just the bank’s name

The new diagram below illustrates the financing form in BNM §17.2(b). The institution first owns the commodity, then sells it to the customer while acting as the customer’s purchase agent, and later sells it to a third party for the customer. It is a conceptual sequence, not evidence of a real transaction. [TW]

As a separately checked provider example, HSBC’s Personal Financing-i terms describe purchase and resale agency alongside the bank’s commodity sale. The borrower’s payment schedule and rebate provisions require their own reading. [HT]

What the journal article tells us

Dual Agency Practices in Islamic Financial Institutions: A Fiqh Perspective (2020) examines juristic disagreement and favours restricted agency in the Malaysian banking context it discusses. On printed p.44 it attributes a passage to Kuwait Finance House concerning an agent selling to itself and a price settled with the principal. Its references on p.48 give the old fatwaId=368 URL, retrieved 30 March 2015. This strengthens the attribution trail, but is not the original fatwa. [A297]

The other cited USIM item, article 303, is about Malay death customs. Its PDF does not substantiate a dual-agency ruling. Its web reference list conflicts with that subject and cannot be used as a second independent financial source. [A303]

What needs to be specified and evidenced

BNM §17.3 requires mutual agreement on essential task specifications, such as price, tenure and asset, plus the proper sequence supported by evidence. Its §27.10 requires documentation or records for each dual-agency role. These are selected requirements; they are not a complete compliance checklist. [TW]

A useful practical question is: “Can you show me the agency appointment and the records for each sale?” A signature alone cannot tell you which role the institution performed at each stage.

Under §§16.8–16.9, the customer remains liable for sale contracts validly made within the mandate. The agent’s liability arises on misconduct, negligence or breach of specified terms. This concerns its agency role; it does not remove the bank’s separate obligations as seller. [TW]

Questions to take to your provider

Agency is an authority arrangement. It does not by itself tell you the total price of financing, the amount of cash received or your ability to repay. Request the offer, disclosure sheet and complete terms together.

The same HSBC terms separate trading costs from delivery costs: the bank pays brokerage or commodity purchase/sale costs (§5(ii)). If you request physical delivery, you must make an express written request when applying, obtain the required licences, permits, approvals and consents, and pay delivery and later ownership-transfer costs (§5(iii)). Ask for the actual amounts before deciding. [HT]

In the named HSBC terms, §15 makes the customer responsible for stamp duty and solicitors’ fees incurred in providing and enforcing the facility. §12 addresses late-payment charges; §14 sets out events allowing cancellation and payment on demand. These obligations need reading alongside the approved schedule and rebate provisions, even when the bank handles the trades. [HT]

• Which person or institution is my agent at each step, and can it appoint another agent?
• What commodity and ownership evidence support the sales? Are the agreed prices and timing visible in my documents? Ask how possession is recorded and how the right to take delivery works (§§13.8–13.10, 15.4–15.5). [TW]
• Is there an agency fee? BNM’s Wakalah policy provides for fee arrangements; request the actual fee base and when it is charged. Separately ask whether the contract requires reimbursement of any costs. [WK]
• For the named HSBC example, read the approved payment schedule, ceiling selling price, rebate, late-payment and early-settlement clauses together. No live quotation or cost comparison is supplied here. [HT]
• Can I apply? HSBC’s FAQ says eligible Muslim and non-Muslim customers may use its Personal Financing-i. This does not establish access to every product or entitlement to approval. [HF]
• If seeking a religious assessment, ask about the exact structure and execution, not just whether “dual agency” is allowed. Separately assess affordability, costs and default consequences. The journal authors’ preference is not a verdict on your contract.

Further reading

For the wider vocabulary of sales, leases and partnerships, consult the contract glossary when available. For who checks compliance in Malaysia, consult the Shariah-governance guide when available. For now, the original source links below let you check the documented rules directly.

References

New editorial explanation prepared 6 October 2026. Sources accessed on that date; publication and effective dates below are separate. External PDFs remain with their publishers.

Publisher webpage: metadata, publication date and licence; References also compared with PDF.

Publisher webpage: metadata, publication date and licence; References also compared with PDF.