New guidelines on imposition of bank service charges

Friday December 10, 2004

BY CECIL FUNG

PETALING JAYA: Commercial banks will no longer be allowed to impose fees and service charges at their own discretion when Bank Negara issues a set of guidelines next year.

Under the guidelines to govern the imposition of such charges from Feb 1, banking institutions will be required to offer basic services at minimal cost.

“Details of the guidelines will be announced in due course. Consumer protection is an integral component of a vibrant banking system,” Bank Negara said in a statement yesterday.

The central bank said the guidelines were the result of an extensive study it had carried out recently to ensure that the public had access to banking services at reasonable cost.

“We have also taken a holistic approach in efforts to strengthen consumer protection by providing mechanisms for consumers to seek redress through complaint units established by banking institutions,” it said.

In addition, an enhanced Financial Mediation Bureau would also be operational from January.

The statement added that Bank Negara would also put in place transparency and disclosure requirements that would ensure customers are given adequate and timely information about the features and costs of financial products and services to allow them to make informed decisions.

The statement came just days after Consumers Association of Penang president S.M. Mohamed Idris called for the central bank to take a proactive role to enforce bank propriety.

In his letter published in The Star on Tuesday, Mohamed Idris said banks had gotten creative in finding ways to impose charges.

Citing an example, he said the move by a major bank to begin imposing annual charges for use of its online facilities from this month was ridiculous as this facility was supposed to bring down labour and processing costs.

He said there was “absolutely no justification” for the exorbitant fees charged by the bank, which was also increasing fees for clearing foreign cheques from RM10.15 to RM30.15 per cheque, as pre-tax profits of commercial banks in Malaysia had increased from RM4.5bil in 2001 to RM6.9bil last year.