PETALING JAYA: For many years now, banks in Malaysia have been imposing a documentation fee of between RM100 to RM600 for housing loan borrowings. But from today, that fee has been abolished after Bank Negara issued a notice of cessation to all banks.
In notices posted by several banks, they allude to a directive from Bank Negara saying banks must cease charging a fee relating to the provision of housing loan or home financing documentation for financial customers.
The Malaysian Bar, which has been championing the issue for years, welcomed the move.
“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,” said Datuk Roger Tan (pic), the chairperson of the Bar Council’s Conveyancing Practice Committee.
“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”, added Tan.
Tan said the previous practice of charging a documentation fee was against the law and had a become a burden for consumers.
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,” said Tan.
He said banks currently charge a fee for the ‘purchase’ of these documents ranging from RM100 to RM600, even though the cost of printing 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 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,” 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.
