The Bank of Thailand will introduce guidelines on service fee calculation by all financial institutions in the third quarter this year, said central bank assistant governor Thanyanit Niyomkarn.
The new service fee calculation guidelines, which “will lead to fair and reasonable charges,” will apply to all service fee types. They will also cover all kinds of customers, from major corporate customers to individual customers.
Ms. Niyomkarn acknowledged the new measures might affect banks’ bottom line. However, she added, they will lead to fair treatment of customers and a higher standard for the financial industry.
Kiatnakin Bank President Philip Chen Chong Tan said the bank was ready to comply with the guidelines. He added that the guidelines are unlikely to affect his own bank’s revenue as it is a small bank.
Last year’s total service fees for commercial banks in Thailand amounted to Bt191bn (£4.72bn), according to Naris Sathapholdeja, head of TMB Analytics. This compares to interest income of Bt480bn (£11.9bn).
“Alleviating consumer and SME financial burden”
Earlier this year, the Bank of Thailand began requiring financial institutions to adjust prepayment charges for small and medium-sized enterprise (SME). The rules also apply to personal loans, late-payment fees for SME, as well as personal and mortgage loans.
The purpose of the adjustments was to base everything on actual costs.
Replacement fees for ATM and debit cards and codes were also to be waived. However, financial institutions are still allowed to charge such fees in the event of high costs. But the fees must be “charged appropriately,” said central bank governor Veerathai Santiprabhob.
The “fairer fee structures” were designed to better reflect actual costs, the bank said. They were also expected to reduce affordability risk, and to alleviate consumer and SME financial burden.
Under the new rules, prepayment charges for SME and personal loans are calculated based on the outstanding balance, rather than the loan amount as done previously.
Financial institutions are also required to set a waiver period for the prepayment charges of the loans.