The Financial Supervisory Commission (FSC) would investigate banks that charge “unreasonably high handling fees” when approving loans to companies affected by the COVID-19 pandemic, FSC Chairman Wellington Koo (顧立雄) said yesterday.
“We will ask why the bank charged very high fees. If [the bank] cannot provide a fair reason or explanation, we will deal with the matter,” Koo told a meeting of the legislature’s Finance Committee in Taipei, without specifying what action it plans to take.
He was responding to a comment by Democratic Progressive Party (DPP) Legislator Michelle Lin (林楚茵), who said she had received a complaint from an affected company, which was charged a handling fee of NT$80,000 (US$2,676) by Taipei Fubon Commercial Bank (台北富邦銀行) for a loan of NT$1.7 million, meaning it received only about NT$1.62 million.
Under a relief program set by the Ministry of Economic Affairs, the interest rate is capped at 1.845 percent for loans to companies affected by the pandemic, Lin said.
Taipei Fubon’s high handling fee is a higher interest rate in disguise, she added.
Lin said that handling fees vary from bank to bank and state-owned Bank of Taiwan (臺灣銀行) had told her that it could have approved loans of up to NT$2.8 million with no handling fee.
Taipei Fubon said in a statement later yesterday that it had clearly informed the borrower, one of its regular clients, about how it would charge handling fees and that the firm fully understood the terms.
The bank charges a handling fee on all loans with maturity of at least one year and it usually deducts the fee directly from the loan, Taipei Fubon said, without revealing how it calculates its fees.
“The handling fee of NT$80,000 is too high, given an average handling fee of NT$5,000 for mortgages at most banks,” a bank executive told the Taipei Times on condition of anonymity.
“It was likely that the bank tried to gain more profit from fees to make up for its loss in interest income due to the government’s interest-rate cap for relief loans,” he said.
Offering relief loans is not a profitable business, but some banks are willing to do it to deepen their relationship with clients and are hopeful that they would be rewarded by the FSC, such as being given priority in setting up new branches, he added.
The central bank, which said it would offer NT$400 billion for lenders to aid ailing companies, has capped the interest rate for loans of less than NT$2 million at 1 percent and 1.5 percent for loans between NT$2 million and NT$6 million, he said.
The Banking Act (銀行法) has set regulations on charging handling fees for mortgages, personal loans or revolving credits, but the law has no clear rules for fees on relief loans, the executive said, adding that the FSC still has multiple tools to address the issue.
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