Protecting the pawners: appraising the role of ministry of housing and local government

The role of consumer credit in modern society is vital particularly when poor economic conditions prevail and cost of living soars. It is prevalent that low and middle-income earners pledge their valuable in exchange for cash by resorting to pawnshops which are often labeled as a bank for poor. Being on the disadvantage side of having low bargaining power, the role of a regulator is indispensable. Therefore, this study examines the role of Ministry of Housing and Local Government which has been mandated to safeguard the interest of pawners under conventional pawnbroking transaction in Malaysia. The scope of discussion covers its institutional set-up, organisational structure while regulatory powers concentrate on licensing and enforcement based on the relevant statutory provisions. The discussion identifies several shortcomings in respect of licensing requirements, enforcement powers and human resources. Overall, the study finds that entrusting this ministry with consumer protection function is inappropriate. Recommendations to enhance protection for this class of consumer are proposed

Institutional framework for consumer credit industry in Malaysia: learning from Australia, the United Kingdom and South Africa experiences

Institutional Framework for Consumer Credit Industry in Malaysia: Learning from Australia, the United Kingdom and South Africa Experience

Influencing the mind of the consumers: the role of the law and the regulators in controlling credit advertisement

Advertising boosts market performance by offering useful information to consumers. It enables firms to promote the attributes of their products and services and, thereby, to compete better with each other. On the other hand, advertising may adversely affect market performance when businesses use it to transmit deceptive or fraudulent messages on which reasonable consumers are induced to rely to their detriment. Regulatory intervention is prerequisite to circumvent those promotional efforts by firms that conveyuntruthful and misleading information to consumers. This study examines the principal laws and regulators involved in governing consumer credit advertisement in Malaysia. The scope is limited to four major areas namely banking, hire-purchase, moneylending and pawnbroking. The piecemeal approach in regulating this industry results in different provisions are in place to regulate consumer credit advertisement by different regulators. As a consequence, prospective consumers of various credit products are subject to different levels of protection which may be greater or lower than the other. Thus, some of them may become the victim of unethical and profit-oriented credit providers who unfairly enticing consumers to close the deal relying on misleading advertisement. The study also finds that the present advertisement regime is still incomprehensive to provide adequate protection to consumers. This study proposes some recommendations to enhance the existing state of credit advertisement control. Other than ensuring inclusive and equal protection to wide range of consumers, strengthened consumer protection regime guarantee market confidence and financial stabilit

Complaint management and redress mechanism: the effect of fragmented institutional approach in regulating consumer credit in Malaysia

Complaint management and redress mechanism constitute cardinal elements of financial consumer protection which should be provided by the financial consumer protection regulator. This study explores the role of the Central Bank of Malaysia, the Ministry of Domestic Trade and Consumer Affairs as well as the Ministry of Housing and Local Government to ensure proper complaint management and redress mechanism in favour of financial consumers of different segments of consumer credit. Applying doctrinal, qualitative and comparative law research methodology, the study finds that as a result of fragmented approach in regulating consumer credit in Malaysia, these aspects are pursued with different priorities and enthusiasm by respective regulators. Thus, the benefit of protection varies from one class of financial consumers to another. To ensure consistency and efficient protection, the study proposes for the establishment of a single regulator, the approach adopted by Australia, a jurisdiction renowned with an established track record in financial consumer protection regime. It is viewed that by establishing a single regulator, a uniform platform for complaint and redress will be provided thereby ensuring equal protection to wide array of financial consumers

Financial Solace: Malaysian Credit Counselling and Debt Management Agency Responses to COVID-19 Challenges

This study evaluates the measures undertaken by the Credit Counselling and Debt Management Agency (AKPK) to assist those financially distressed due to their inability to meet their financial commitments amidst the COVID-19 pandemic. Adopting secondary analysis of qualitative data, relevant secondary data, including journal articles, annual reports, and newspaper articles, were analyzed. The study finds that measures adopted by AKPK in response to the COVID-19 pandemic include reinforcing the workforce, enhancing IT infrastructures, deploying digital platforms, using various media channels, introducing online apps, online portals, online webinars, online learning modules, and online payment facility for all debt management participants. AKPK is also entrusted with handling small and medium enterprises (SMEs) under the Small Debt Resolution Scheme. A dedicated SME Helpdesk is established to facilitate the process. AKPK’s continual support to provide financial aid is reflected in its collaborative effort with the banking industry under the Financial Management and Resilience Program and the Financial Resilience Support Program. However, the government should seriously consider strengthening personal data protection laws because of AKPK’s significant reliance on digital platforms. Similarly, appropriate government bodies must take quick action to address the digital divide issue and promote inclusion to reduce disparity in terms of access to online services offered by AKPK. Also, since certain individuals or SMEs with credit facilities with entities not regulated by Bank Negara Malaysia are deprived of this incentive, relevant regulators should undertake actions to provide a similar facility. This study is significant in that it provides lessons to be learned by other credit counseling and debt management agencies in adopting effective measures to enable them to adapt to the new normal. Doi: 10.28991/ESJ-2023-SPER-011 Full Text: PD

A Comparative Assessment of Alternative Dispute Resolution for Financial Consumer Protection in Malaysia and Indonesia

The Ombudsman for Financial Services (OFS) handles financial services complaints in Malaysia. Meanwhile, the Alternative Institution for Dispute Resolution in the Financial Services Sector (LAPS SJK) handles financial disputes and safeguards customers from financial fraud in Indonesia. This study aims to analyse and compare the legal framework in both institutions for protecting financial consumers, considering their similarities and differences in regulatory approaches, consumer rights, and enforcement mechanisms. The findings of this study can provide insights for policymakers and regulators in both countries to enhance their efforts to safeguard the interests of financial consumers

Protecting the pawners: appraising the role of the Ministry of Housing and Local Authorities

The role of consumer credit in modern society is vital particularly when poor economic conditions prevail and cost of living soars. It is prevalent that low and middle-income earners pledge their valuable in exchange for cash by resorting to pawnshops which are often labeled as a bank for poor. Being on the disadvantage side of having low bargaining power, the role of a regulator is indispensable. Therefore, this study examines the role of Ministry of Housing and Local Government which has been mandated to safeguard the interest of pawners under conventional pawnbroking transaction in Malaysia. The scope of discussion covers its institutional set-up, organisational structure while regulatory powers concentrate on licensing and enforcement based on the relevant statutory provisions. The discussion identifies several shortcomings in respect of licensing requirements, enforcement powers and human resources. Overall, the study finds that entrusting this ministry with consumer protection function is inappropriate. Recommendations to enhance protection for this class of consumer are proposed

Tackling responsible lending obligation in Malaysia: a diverse approach

This paper examines responsible lending obligation among various credit providers under the present legal and institutional framework in Malaysia. The scope of consumer credit industry includes banking, hire-purchase, money lending and pawnbroking. The study finds an inconsistent approach in dealing with responsible lending whereby only banking institutions regulated by the Central Bank of Malaysia are subject to this obligation while non-bank institutions are not. Several recommendations for future improvements are proposed by referring to the practice of several other jurisdictions. The suggestions will help the policymakers to seriously consider imposing this obligation on all credit providers. Eventually, the protection against the irresponsible lending practice is accorded to a wide range of financial consumers in consumer credit industry in Malaysia

A critical appraisal on financial consumer protection in Malaysia

Recently, the protection of financial consumer becomes a rising concern of many countries in this world. In Malaysia, Consumer Protection Act 1999 (CPA) is a present law aims at providing protection to general consumer including financial consumer. The coming into force of Financial Services Act 2013(FSA) and Islamic Financial Services Act 2013(IFSA) marks an important milestone in strengthening financial consumer protection and indicates a significant transformation in the legal framework vis-à-vis the protection and empowerment of this group of consumer. While the regulator accountable for consumer protection under FSA and IFSA is Bank Negara Malaysia (BNM), CPA is under the jurisdiction of Ministry of Domestic Trade, Cooperative and Consumerism (MDTCC). For that reason, this paper attempts to critically appraise key provisions under these three statutes with reference to financial consumer protection