6 banks accused of illegal action, violating rights

The China Post news staff

TAIPEI, Taiwan — The Consumers’ Foundation has filed a lawsuit against six banks, including one foreign financial institution, for violating Taiwanese consumers’ rights. It asked the Taipei District Court to order the six banks to immediately stop the illegal practice. Su Chin-shia, head of the foundation, said Cathay United Bank, Taiwan Business Bank, the Bank of Taipei, Hwatai Bank, and King’s Town Bank of Taiwan, as well as Standard Chartered Bank were named as defendants in the case. Su said that the banks generally hold customers accountable for debts, including the principal of a loan, interest repayment, fines for delayed repayment. However, these banks have violated customers’ rights in the lending contracts that extend the coverage to also include customers’ other debts arising from credit cards and other financial obligations with different banks, she said.

Such a practice can disrupt the transactions involving the consumers and affect their rights. Su gave an example in which a person took out a mortgage loan of NT$6 million with a bank when purchasing an apartment. The customer could immediately repay the NT$6 million loan after selling the apartment.

However, the bank could ask the customer to immediately repay other debts as well, including credit loans and debts incurred with credit cards. The bank would refuse to issue a certificate stating that the customer’s debts have all been cleared. The refusal could cause a suspension to the transaction of the apartment and other more complicated financial trouble for customers. This would disrupt the financial plans of customers mainly because many consumers are kept in the dark concerning the banks’ planned moves on their additional debt obligations. Su said the foundation has studied the case for more than half a year. It decided to formally take legal action to mark the nation’s Consumer Rights Day, yesterday. The nation’s Consumer Protection Law was promulgated on Jan. 11, 1994, following the ratification of the bill by legislators. Most of the banks facing allegations of violating consumers’ rights said there was a misunderstanding on the part of the Consumers’ Foundation. Executives at Standard Chartered Bank and Taiwan Business Bank said they will not make any formal comments before receiving official court notice with details of the litigation. A volunteer lawyer working with the foundation suggested that consumers avoid having financial dealings with only one bank. Consumers can have greater flexibility when seeking financing if they have more than one bank.

Hsieh Tien-ren, a director at the foundation, said it is not fair for banks to overprotect their own interests at the expense of consumers’ interests. All customers dealing with banks should spend time to carefully study the contracts in detail, he suggested. The legal action against the six banks was designed to force them to revise the articles in their standard contracts as early as possible to avoid more controversies, he added.