The government of Malaysia is working on the formulation of a Consumer Credit Act, with the Ministry of Finance leading this initiative.
On 4 August 2022, the consumer credit oversight board task force issued a consultation paper for public feedback, which remained open until 5 September 2022 and concerned a proposed framework for regulating the conduct of entities that carry out the business of providing credit or credit services to consumers, with an immediate focus on those that are not currently subject to direct regulation by an authority.
Pursuant to this consultation paper, the proposed Consumer Credit Act will provide:
- an authorisation framework for, among other things, non-bank factoring and leasing companies, impaired loan buyers, debt collection agencies and buy-now-pay-later companies;
- a comprehensive and consistent framework for credit consumer protection through the imposition of minimum standards of conduct on credit providers and credit service providers; and
- the establishment of a consumer credit oversight board as a new, independent and competent authority for consumer credit.
The Act will also define "credit consumer" for the purposes of the Consumer Credit Act as:
- an individual who obtains, has obtained or intends to obtain credit from a credit provider, wholly or predominantly for personal, domestic or household purposes;
- a person who is a small or micro enterprise that obtains, has obtained or intends to obtain credit from a credit provider, not exceeding 500,000 ringgit;
- any other person or class, category or description of persons as the Ministry of Finance may prescribed; or
- an individual who acts as a guarantor (not for the purpose of making profit) to a credit consumer under paragraphs (a), (b) or (c) in respect of a credit agreement to which the Consumer Credit Act applies.
For further information on this topic please contact Pamela Kung at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.