MALAYSIA, KUALA LUMPUR, May 15, 2010 - Several non-governmental organisations slammed what they described as the use of loan shark-style debt collection methods employed by banks and financial institutions.
They said there were even instances of consumers receiving threatening calls from agents and debt collection companies appointed by banks.
Federation of Malaysian Consumers Asso'ciations (Fomca) advisor Prof Datuk Mohd Hamdan Adnan said banks and financial institutions should not use third party entities to collect debts.
'There are other ways to debt collection such as through lawyers,' he said.
Hamdan said there were specific laws and regulations governing debt collection as outlined in the Hire Purchase Act.
Muslim Consumers' Association of Malaysia (PPIM) secretary-general Datuk Dr Maamor Osman called on Bank Negara to review the mechanism adopted by banks and financial institutions for debt collection, such as by rescheduling loan repayments.
'It is not proper for banks to use the service of third party companies to collect debts and make threats over the phone,' he said.
Transport Workers' Union secretary-general Datuk Zainal Rampak said he received complaints from workers that they were frequently harassed by phone calls from debt collection companies and agents for defaulting on just one or two instalments.
'There was one recent case involving a credit card holder who defaulted on a settlement of RM7,000, and was bombarded by phone calls and threats to auction off his home,' he said.
Zainal said the current economic situation left workers with difficulties in making ends meet.
Banks should therefore display a greater sense of social responsibility and adopt a more humane approach in recovering loans from borrowers, he said.- The Star