Saturday, September 28, 2019

'Review fees for loan documents'

The Bar Council said it is high time for banks to review its practice of imposing fees for loan documents. (Image by Pixabay:  For illustration purposes only)

New Straits Times

Banks' practice against the law, a burden to customers, says Bar Council official 

KUALA LUMPUR: The Bar Council said it is high time for banks to review its practice of imposing fees for loan documents.

Bar Council conveyancing practice committee chairman Datuk Roger Tan said the practice was against the law and has a become a burden which consumers could do without.

He said the fee was imposed on the banks’ loan documents, which borrowers sign when taking, for example, a housing loan.

“These documents are largely standardised documents for each bank.

“The bank’s solicitors will typically download the documents from the bank’s website and, after completing the particulars relating to the borrower and the loan, print for the borrower’s signature,” said Tan.

He said banks currently charge a fee for the ‘purchase’ of these documents ranging from RM100 to RM500, even though the cost of printing the documents is borne by the solicitors.

He said that the document fee is usually passed on to the borrowers as part of the solicitor’s charges. However, Tan said that in some cases, solicitors are compelled by the banks to absorb these costs.

“This results in the borrowers having to pay additional costs when taking a loan from a bank and the solicitors getting peanuts for the professional work done especially purchasers of low- and medium-cost and affordable homes.

“The Bar Council objects to the banks charging such a fee,” said Tan.

He cautioned against imposing the fees as the sale of loan documents was 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.

Tan said the Bar Council regretted that despite several representations made to Bank Negara Malaysia, the central bank had failed to put a stop to the "unhealthy practice" which unfairly increased the financial burden on consumers.

He said this would, in turn, mean that Bank Negara failed in its role as the regulator of banks in Malaysia.

“Surely, the central bank cannot be waiting for the Federal Court to intervene again before it decides to act on it just like in the case of the British borrower Anthony Lawrence Bourke and wife who succeeded in declaring that it was unconscionable for banks to seek refuge behind exclusion clauses.

“The Central Bank must lead and spare a thought for the borrowers and solicitors who are often at the mercy of this unequal bargaining with the powerful financiers”, said Tan.

He, however, welcomed a recent move by Malaysian banks to do away with the charges for cash and cheque transactions for credit cards and financing repayments for over the counter and cash deposit machines transactions.

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