30th March 2023 - 2 min read
The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) revealed that Bank Negara Malaysia (BNM) has introduced a standardised housing loan and home financing agreement. This is in a bid to make it easier for retail borrowers to understand and compare the terms and conditions in these documents when taking out a loan.
In a statement, AIBIM said that the initiative will see such agreements using simpler language, particularly in describing the obligations and responsibilities of borrowers and banking institutions. It is also expected to improve the quality of service delivery in the long run, and provide enhanced customer protection in the financial industry.
“This move reinforces Bank Negara Malaysia’s commitment to promoting fair consumer outcomes in the financial industry in accordance with the Policy Document of Fair Treatment of Financial Consumers, as well as other relevant policy documents, guidelines, and circulars issued by the central bank,” said AIBIM.
As part of the implementation of this standardised housing loan and financing agreement, financial institutions have also been required to abolish the loan documentation fee (on housing loan and home financing documents) on lawyers, directly or indirectly. This update took effect on 1 February 2023.
Briefly, the loan documentation fee is a charge that banks impose on lawyers for the purchase of bank loan documents, which are mostly standardised documents downloaded from the banks’ portals for borrowers to sign when they take out a loan. The purchase of such documents could cost between RM100 to RM600 – a fee that lawyers would often then pass on to borrowers.
(Sources: AIBIM, The Edge Markets)
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