15th November 2021 - 2 min read
Bank Negara Malaysia (BNM) has revealed that it is looking to pass the Consumer Credit Act in 2022, with the intention to bolster regulatory arrangements for all consumer credit activities. This includes buy-now-pay-later (BNPL) schemes.
To clarify, the Consumer Credit Act was earlier brought up by BNM as one of the strategic outcomes of its Business Plan 2018-2020. It sought to “impose consistent consumer protection requirements on banks and non-bank credit providers”, and was strongly advocated by the Federation of Malaysian Consumers Associations (FOMCA). The government subsequently pushed for the formulation of the Consumer Credit Act during the tabling of Budget 2021.
In working to enact this Act, the governor of BNM, Datuk Nor Shamsiah Mohd Yunus said that the central bank will be working closely with the Ministry of Finance (MoF) and the Securities Commission Malaysia (SC). At the same time, it also called for support from relevant authorities to monitor the development of BNPL schemes within the country, as well as to educate the public on such schemes.
Datuk Shamsiah commented that although the proportion of BNPL schemes within total household loans is still low, such programmes are quickly growing in popularity and need to be monitored.
“For the first nine months of this year, the total value of the [BNPL] transaction is estimated to be around 0.05% of total household borrowing. These schemes have been on the rise, not just in Malaysia, but also in other countries and there are legitimate concerns that such schemes may encourage consumers to spend beyond their means, with expensive debt that they may not be able to repay, and most BNPL schemes in Malaysia are offered by non-banks,” said Datuk Shamsiah during a joint conference by the central bank and the Department of Statistics Malaysia (DOSM).
Accordingly, Datuk Shamsiah urged Malaysians to always be thorough in reading the terms and conditions of BNPL schemes when applying for them, especially in terms of the fees charged. She also advised them to always repay their obligations in full on time to avoid penalties, as well as monitor their BNPL obligations to properly manage their debts.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world