KUALA LUMPUR – The Consumer Credit Act (CCA), which is expected to be enacted by the end of 2023, is highly needed to address the growing number of unregulated players in the consumer credit space, including “Buy Now, Pay Later” (BNPL) companies.
Along with BNPL companies, the CCA aims to bring unregulated players like non-bank factoring and leasing companies, impaired loan buyers (ILB) and debt collection agencies (DCA) under the Consumer Credit Oversight Board (CCOB) in phases.
CCOB, an independent competent authority, set up under the Finance Ministry (MoF) is set to administer the act.
Besides MoF, CCOB is also supported by Bank Negara Malaysia (BNM) and the Securities Commission (SC).
“Currently, either they (BNPL companies etc) are not regulated or fall under different regulatory and supervisory authorities, such as BNM, SC, Domestic Trade and Consumer Affairs Ministry, Housing and Local Government Ministry, Entrepreneur Development and Cooperatives, and Co-operative Societies Commission of Malaysia (SKM).
“The fragmented regulatory frameworks in the consumer credit landscape in Malaysia (have) given rise to an unlevel playing field and regulatory disparity between different providers of consumer credit.
“Concerns are further heightened when credit activities are targeting consumers who are vulnerable, financially less savvy, and less resilient, such as micro-enterprises and individuals who earn lower incomes,” said the SC and BNM in a joint statement today.
It also said the government is working on the formulation of the CCA, with the aim of strengthening protection for credit consumers in Malaysia.
Besides protection for individuals, the CCA is also aimed at protecting micro and small enterprises (MSEs) that obtain credit not exceeding RM500,000.
“The threshold of RM500,000 would cover almost 70% of current small and medium enterprise (SME) loans,” said the first of two consultation papers released with regard to the act.
The paper provides an overview of the current landscape of the consumer credit industry in Malaysia, its challenges, and proposed reforms to better protect individuals and small businesses in their dealings with credit providers and credit service providers.
The reforms will be implemented in phases under a proposed multi-year programme to deliver consistent standards of protection for credit consumers and support the orderly development of the credit industry in Malaysia.
“The CCOB task force seeks feedback on the proposed regulatory and authorisation framework, as well as areas that will be addressed in the legislation to promote high standards of professionalism and fair conduct of credit providers and credit service providers,” said the statement.
“This will be followed by Part 2 of the consultation paper, targeted to be issued in the fourth quarter of this year, which will provide further details on authorisation, governance, and conduct requirements that will be applied to credit providers and credit service providers.”
The public consultation paper is available for download from CCOB’s website. This website serves as a one-stop reference point for all stakeholders seeking information and updates related to CCA and CCOB.
Interested parties and members of the public are invited to provide feedback and comments on the consultation paper to the CCOB task force by Monday (September 5) by emailing to [email protected]. – The Vibes, August 4, 2022
