Tighter regulations coming for credit platforms, says Bank Negara

KUALA LUMPUR: There will be tighter regulations for credit platforms like the Buy-Now-Pay-Later (BNPL) service under the Consumer Credit Act (CCA), says Bank Negara.

The central bank’s financial inclusion department director Nor Rafidz Nazri said that the Act will allow the government to ensure that non-bank entities – currently not supervised by any authorities – comply with the regulations and practices of credit provision.

He told Berita Harian that an authoritative body would be established at the initial stage and will be responsible for supervising entities offering such service products.

“To further strengthen consumer credit protection in Malaysia, the government is drafting the Consumer Credit Act.

“A consumer credit monitoring task force led by the Finance Ministry with two agencies, Bank Negara and the Securities Commission Malaysia, are responsible for providing a comprehensive framework for this.

“It aims to regulate the practices of non-bank entities providing credit services to consumers as well as to oversee new credit product providers such as the BNPL,” he told Berita Harian.

Berita Harian had earlier reported that an increasing number of young people are in debt, with many of them starting to feel burdened when financing motorcycles through credit agencies.

As a result, there are proposals from non-governmental organisations and consumer associations to tighten the loan terms from credit providers.

The credit platform offers consumers monthly instalment repayments without interest or loan limits.

Nor Rafidz said that for the purpose of drafting the legislation several ministries, including the Domestic Trade and Cost of Living Ministry and the Housing and Local Government Ministry have come together.

“We are constantly monitoring and ensuring that financial institutions take responsible steps when offering financial services and products.

“Any market practices that are unfair and can cause significant harm to consumers may be subject to supervision and enforcement actions by Bank Negara,” he said.

Meanwhile Nor Rafidz, who is also the Financial Education Network (FEN) joint chairman, said they welcomed efforts to strengthen consumer credit protection and efforts to empower the “financially savvy” community among Malaysians.

He said that in offering financing products, all financial institutions regulated by the central bank were required to adhere to prudent financing requirements to ensure borrowers had sufficient financial capacity for daily expenses.

“It is to protect consumers from excessive debt burdens.

“In an effort to increase public awareness of the importance of prudent financial management among young people, FEN has introduced financial education modules as elective subjects in several higher education institutions.

“To complement this process, an online financial education programme known as FEN Proactive has been specially designed for final-year students,” he said.