PETALING JAYA: A Bank Negara Malaysia (BNM) directive prohibiting the charging of fees for the purchase of standardised financing documents does not prevent law firms from charging for their services, say lawyers.
The circular had instructed financial institutions and legal firms to do away with documentation fees for standard form housing loan and home financing agreements with effect from Feb 1.
A senior conveyancing lawyer of 15 years’ standing said the directive was being misconstrued by borrowers to mean that lawyers cannot charge legal fees for loan transactions.
“Bank Negara only asked financial institutions to stop imposing documentation fees in connection with retail loan applications,” the lawyer clarified.
“Prior to this, loan applicants were being charged between RM250 and RM500 for such documents.
“Law firms are still entitled to charge fees for services rendered in accordance with a schedule set by the authorities.”
On March 22, a Bar Council circular reminded lawyers not to impose documentation fees after receiving complaints that some law firms were continuing with the practice.
Another lawyer confirmed that legal firms were still allowed to charge financiers and borrowers for services rendered.
These services include witnessing the execution of documents, managing the transfer of titles and acting as stakeholder when loans are disbursed.
“We also have a duty to ensure all titles are charged to the lender and later discharged once a loan has been repaid,” he said.
In its directive, the central bank had said the initiative was intended to enhance the quality of service delivery, promote consumer understanding and simplify the language used in such agreements, especially as regards the responsibilities of the borrowers and financiers.
The move also reinforces BNM’s commitment to promoting fair consumer outcomes in the financial industry.