Bank charges have become purely a money making scheme for the banks. This is the only logical conclusion since the fees bear no resemblance to the actual cost borne by the banks.
It is time the authorities put a stop to excessive bank charges. (We estimate that banks earned in excess of RM1 billion in 2004 from banking fees and charges.)
Unfair banking charges are many and vary from bank to bank. However looking at some of the fees connected with housing loans is sufficed to show how unreasonable the fees are.
Is it not preposterous for a bank to charge:
- RM50 for the simple exercise of issuing a confirmation letter to EPF so that the borrower can withdraw his savings under the EPF Housing Withdrawal Scheme?
- RM20 to issue a back copy of the housing loan (June 2006) statement when the reason the borrower wanted it is because she had not received it.
- RM120 just to issue redemption letter (a letter to inform the borrower how much he has to pay to settle the loan in full)?
- RM200 if the borrower’s request for a reduction in interest rate on the loan is successful?
Malaysia is not the only country with banking fees problems. However in the United Kingdom, the Office of Fair Trading (OFT) has stepped in to rein excessive bank fees.
The OFT announced in April last year that default charges ( missing or late payment charges) which are more than ?12 (RM 83) will be presumed to be unfair and unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999. The OFT also made it clear that charges of less than ?12 would not automatically be considered fair.
Excessive bank charges are therefore unlawful and illegal in UK. Consumers can reclaim charges for the last 6 years for fees paid on credit cards or to the banks. For mortgagees, the claims can go back the last 12 years. One businessman successfully claimed ?35,988 (RM 249,680) from his bank for charging him unlawful overdraft fees.
The OFT has also carried out a formal investigation into the level of bank charges. It wants to make sure that if present charges are reduced, they do not just lead to higher charges elsewhere.
Bank Negara needs to carry out a similar study of bank charges in Malaysia. It should then act against banks that are guilty of charging excessive fees.
Banks must be transparent on how they determine the cost of the charges. Charges that cannot be justified should be withdrawn.
The extortion racket must end now.