BNM Asst Governor Warns Against Unethical Advice On EPF Withdrawals
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(Image: The Edge Markets)

Members of the Employees Provident Fund (EPF) should take caution against “unethical advice” which encourages those who are not in financial distress to withdraw from their Akaun 1 to invest in high-risk investments.

This was highlighted by Bank Negara Malaysia (BNM) assistant governor Fraziali Ismail following the announcement of the enhanced i-Sinar Akaun 1 withdrawal facility by the government and EPF. According to Fraziali, self-proclaimed financial gurus on social media were also irresponsibly advising borrowers who are not facing financial hardships to seek loan moratoriums or channel their savings from deferred loan repayments into higher-risk investments to make quick returns.

“What they fail to mention is that while it helps in easing cash flow problems for those affected, moratoriums do come at the cost of higher overall borrowing costs to the consumers, who may even be faced with the prospect of loan defaults should these short-term investments go sour,” he said in his keynote address at the Malaysian Financial Planning Council – Professional & Ethics Forum 2020.

(Image: BNM)

“In such circumstances, I expect all financial practitioners to serve as a source of sound financial advice to counter such unscrupulous publications and to dissuade your clients from making irrational financial decisions that are not in their best interest,” said Fraziali. The assistant governor noted that this would require financial practitioners to take the “higher ground” and set aside the temptation to promote risky investments or insurance products that could garner high commissions.

“While this may dampen your earnings prospects in the short term, you stand to gain the trust, confidence, and loyalty of your clients over the long term. I have faith that all of you – who have taken the time to participate in this conference – will rise to this challenge and contribute to the building of a financial intermediation industry that is both profitable and ethical,” he concluded.

EPF i-Sinar allows affected contributors to withdraw up to RM10,000 from their Akaun 1 if they have a balance of RM100,000 and below, and up to 10% of their Akaun 1 savings capped at RM60,000 for those who have more than RM100,000 balance. The funds will be given out over a period of up to 6 months with a first payment of up to RM5,000. Applications for i-Sinar will open on 21 December 2020 for applicants who are eligible for automatic approval and 11 January 2021 for those who need to provide supporting documents.

(Source: The Edge Markets)

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