Banks must disclose pre-payment costs

Dear PAO,
Do banks have an obligation to disclose not only the terms of a loan but also other aspects, such as the costs of pre-paying a loan? My brother, a fisherman, obtained a loan from a bank in our province. He only has a few months of amortizations left until he pays off his loan, so he is contemplating pre-paying his loan balance and has asked me if I can help him with it. But we were told by the bank employee that he would have to pay P25,000 if he pushed through with the pre-payment. This was not disclosed to him when he secured the loan. Isn't it also that banks should not discriminate against anyone? We feel that, just because my brother is a fisherman, the bank employees are giving him a very difficult time and purposely withholding important information, such as the costs of pre-payment of loans.
Ester
Dear Ester,

We have a law that requires banks and other financial service providers to disclose all information concerning the financial product or service. This law is Republic Act (RA) 11765, otherwise known as the Financial Products and Services Consumer Protection Act. Section 8 (b) and © thereof expressly provides:
«Section 8. Duties and Responsibilities of Financial Service Providers. – x x x
»(a) Appropriate Product Design and Delivery. – Financial service providers shall continuously evaluate their financial products or services to ensure that they are appropriately targeted to the needs, understanding and capacity of both their markets and their clients. This shall include, among others, the following: x x x
"(3) Pre-payment of loans and other credit accommodations. – A borrower may, at any time prior to the agreed maturity date, prepay a loan or other credit transactions in whole or in part: Provided, That costs or fees charged to the borrower for such pre-payment, if any, shall be disclosed to ensure transparency, disclosure, and responsible pricing as required under this section.

"(b) Transparency, Disclosure, and responsible Pricing. – Financial service providers must ensure that they adopt disclosure principles in their communications and their contracts with financial consumers, including the use of clear and concise