EnTie Commercial Bank (安泰銀行) yesterday denied having collected NT$47 million (US$1.5 million) in unjust fees from a borrower before proceeds from a NT$1.29 billion loan were paid out in a dispute dating back to Dec. 25, 2014.
The bank was responding to a news conference held by Democratic Progressive Party caucus whip Wu Ping-jui (吳秉叡) on behalf of the borrower.
The borrower, a New Taipei City-based real-estate developer, said that its agreement with the bank stipulates that no fees would be required until the loaned funds are disbursed and utilized.
However, just six days after the agreement was finalized, the bank said that the fees must be paid to meet procedural requirements to cross over to the next fiscal year, or the borrower risked losing the line of credit.
The bank then refused to refund the fees after the borrower canceled the loan in light of changes in investment outlook and other considerations.
As of Feb. 19 last year, the loan has not been utilized, the borrower said, adding that the agreement did not include the obligation to utilize the credit line extended by the bank.
“The bank misled the borrower with highly technical financial jargon to reap exorbitant fees from individuals,” Wu said, urging regulators to penalize the bank according to the Financial Consumer Protection Act (金融消費者保護法).
EnTie denied the allegations and said that the dispute in question extends beyond the scope of a simple commercial loan, and that the fees it charged were for complex financial services it provided.
The agreement with the borrower was created over several months, during which the bank had maintained amicable relations with its client, EnTie said in a statement, adding that the client did not raise objections to the fees as it was unable to utilize the loaned funds.
The agreement involved comprehensive structured financial planning for several land development projects, as well as coordinating lines of credit from other lenders, the bank said.
In addition, the bank had performed complex due diligence and verification of a number of land development contracts, land deeds, construction contractors and land owners to fashion a tailored solution for the client, it said.
EnTie said that the borrower had twice requested an extension of the loan’s disbursement to the end of April, due to reasons that led to the client’s inability to meet the requirements of the financial planning arrangements that the bank has been asked to devise.
“The dispute stems from the client’s inability to carry out the advised financial planning, due to reasons beyond the bank’s control,” EnTie said.
“In demanding refunds of reasonable fees in exchange for exhaustive professional financial planning services, the client had reversed previous agreements,” EnTie said, adding that it is awaiting a court’s ruling on the dispute.
Banking Bureau Deputy Director-General Lu Hui-jung (呂蕙容) said that while financial institutions may impose fees based on risk exposure and service costs, the terms must be fair, reasonable and transparent.
Lu added that the Financial Consumer Protection Act would be applicable in determining alleged wrongdoing in the dispute, and whether EnTie had failed to fully disclose contract terms, as well as all relevant risks to the client.
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