‘Documents standardised to give protection’


KUALA LUMPUR: The standardisation of documents for housing loan agreements by Bank Negara Malaysia (BNM) creates a protection mechanism for borrowers due to the problem caused by a lack of understanding on the agreement, said the Federation of Malaysian Consumers’ Association (Fomca).

Fomca secretary-general Datuk Paul Selvaraj said the use of language that was easily understood in the document could improve understanding by the borrowers compared to the ‘legal jargon’ used.

“Usually, our consumers seldom read the agreement because the language is complex besides the thickness of the agreement which is like a dictionary and even if it is read, we seldom understand the contents.

“Even when there are terms that we understand, it is difficult to ask the bank concerned to amend it (term). When they are standardised, it will give basic protection to the consumers as an assurance that our interests are protected,” he told Bernama.

On Friday, the BNM announced that all banking institutions were required to adopt a standard documentation for conventional housing loan and financing agreements for a principal loan of RM500,000 and below effective on Tuesday. — Bernama