The documentation fee for housing loan borrowings has been abolished by local banks following a “notice of cessation to all banks” from Bank Negara Malaysia, according to a report by The Star.
The daily reported that notices posted by a number of banks mentioned the directive from Bank Negara, detailing that they must from today “cease charging a fee relating to the provision of housing loan or home financing documentation for financial customers”.
A documentation fee of between RM100 to RM600 for housing loan borrowings had always been charged by banks before this directive was issued.
“This is a good decision for consumers and the timely abolition of the documentation fees will lighten the burden on borrowers by reducing costs especially for purchasers of medium cost properties,” chairperson of the Bar Council’s Conveyancing Practice Committee, Datuk Roger Tan, told The Star.
“This is one matter which the Bar Council has been engaging over a number of years with all the relevant stakeholders, especially Bank Negara and the Association of Banks Malaysia. In fact, we had also raised it with two finance ministers, namely former finance minister Lim Guan Eng and the current Finance Minister Datuk Seri Anwar Ibrahim,” said Tan.
“The decision is also in accordance with the law, that is, only lawyers can charge a fee for the preparation of documentation for immovable property under section 37(2) of the Legal Profession Act, 1976,” he added.
Tan explained that the previous practice of charging a documentation fee was actually against the law and “had a become a burden for consumers”.
He said the document fee is usually passed on to the borrowers as part of the solicitor’s charges, but in some cases, solicitors are compelled by the banks to absorb these costs.
“This results in 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,” Tan added.
Meanwhile, consumer groups have also praised the move by Bank Negara.
“This is great news, especially at this time when the cost of living is high and tough for the people. Banks have been somehow getting away with charging consumers for documentation fees before this.
“So this is a very positive step by the central bank to help consumers in facing the cost of living issues,” Federation of Malaysian Consumers Associations secretary-general, Datuk Dr Paul Selvaraj told The Star.
Consumer Association of Penang (CAP) president Mohideen Abdul Kader told the daily that getting rid the documentation fee would ease the borrowers’ burden.
“CAP welcomes the abolishment of documentation fees between RM100 to RM600 for loans. It’s a very good move.
“This will help alleviate the burden on the poor,” he said.