The CP2, building on the first consultation paper issued on 4 August 2022, covers the requirements on authorisation, governance and conduct expected of all non-bank credit providers and credit service providers which are currently unregulated. In particular, this refers to businesses carrying on Buy Now Pay Later (BNPL) activities, Leasing and Factoring services, Debt Collection Agencies (DCA), Impaired Loan Buyers (ILB) and Debt Counselling and Management Services (DMA).

Bank Negara Malaysia Assistant Governor and the Head of the CCOB Task Force Abu Hassan Alshari Yahaya said, “It is critical that credit providers and credit service providers are regulated and conform to high professionalism or conduct standards. We will continue our extensive engagements with the currently unregulated industry and consumers to deliver a practical regulatory response. The aim is to strengthen the protection for consumers while supporting the development of a consumer credit industry that effectively serves the needs of individuals and small businesses.”

The scope of CP2 covers, among others, proposed key licensing requirements. These include minimum financial requirements, governance and Shariah requirements for Islamic credit businesses. It also sets out professional conduct and responsible lending standards that must be met by potential licensees.

Additionally, CP2 also covers proposed enhancements to the Hire Purchase Act 1967 (HPA 1967). These enhancements are aimed at modernising the act and improving consumer outcomes. In particular, CCOB Task Force is seeking feedback on the proposed removal of Rule 78. Such rule pre-calculates interest charges on hire purchase contracts as such that more interest is paid in the earlier period of the loan tenure. This financing method can lead to unfair outcomes for borrowers opting for early settlement. The proposed changes to the HPA 1967 also include the acceptance of digital and electronic signatures for hire purchase agreement processes.

The proposals outlined in CP2 provide further details on the implementation of the Consumer Credit Act (CCA) which is targeted to be enacted by year-end. The CCA will regulate all non-bank credit providers and credit service providers in Malaysia. It aims to create an orderly, transparent, and fair credit ecosystem to protect credit consumers who are individuals who obtain or seek credit for personal, domestic, or household purposes; and small and micro enterprises with loans up to a certain threshold.

Interested parties and members of the public are invited to provide feedback and comments on the consultation paper to CCOB Task Force by 15 May 2023. Visit the CCOB website to use the feedback form feature or email [email protected].

For more information about CCOB and CCA, please visit www.ccob.my.