MOF, BNM, SC Task Force Seeks Feedback for BNPL Regulation

The Consumer Credit Oversight Board Task Force today issued the Consumer Credit Act consultation paper, the new act seeks to regulate and consolidate all consumer credit activities under its umbrella, and to promote fair lending and responsible conduct by credit providers.

The task force is led by the Ministry of Finance, Bank Negara Malaysia, and Securities Commission Malaysia in collaboration with the Ministry of Housing and Local Government, the Ministry of Domestic Trade and Consumer Affairs, the Ministry of Entrepreneur Development and Cooperation, and the Companies Commission of Malaysia.

The consultation paper is the first of a two-part consultation paper, which provides a broad overview and approach of the proposed regulatory framework. The second part which is targeted to be released in Q4 of 2022 will focus more on the nitty-gritty aspects of the authorization and licensing framework that will apply to credit providers.

The framework defines “credit consumers” as individuals who obtain or intend to obtain credit from a credit provider as well as micro, small and medium enterprises (MSMEs) who obtain credit from a credit provider not exceeding RM 500,000.

Based on this definition, P2P lenders will also need to comply with the minimum requirements under the act as they typically provide financing to SMEs under the sum of RM 500,000.

The task force seeks to roll out the regulatory framework in three phases, in the first phase credit activities that will be regulated include; BNPL, Factoring Leasing, Impaired Loan Buyers, and Debt Collection Agencies.

In this first phase, BNPL operators, factoring, or leasing businesses will need to seek licensing from the Consumer Credit Oversight Board, and credit service providers engaging in debt collection and the buying of impaired loans will need to be registered.

Since BNPL is currently an unregulated activity, it is expected that a grace period will be given during the transition to become regulated entities.

Whereas in phase two, the act seeks to regulate Hire Purchase, Credit Sales, Moneylender and Pawnbrokers. Currently, these consumer credit activities are regulated by the likes of the Ministry of Housing and Local Government and the Ministry of Domestic Trade and Consumer Affairs.

Finally, in Phase 3 which is slated for 2030, further proposals will be developed to consider the appropriate regulatory architecture for the financial sector in Malaysia.

The Task Force welcomes feedback to be submitted by 5th September via email to [email protected] The task force will also be holding focus group discussions and engagement sessions with industry players in the following one to two months.

The consultation paper can be downloaded here.


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