Dewan Rakyat passes the Consumer Credit Bill
The passage of the Bill would make way for the establishment of a Consumer Credit Commission (CCC) as the new authority regulating non-bank credit providers and credit service providers in the country, including buy-now-pay-later (BNPL) providers.
Deputy Finance Minister Lim Hui Ying said that based on a survey conducted by the Consumer Credit Oversight Bureau (CCOB), 88% of the total 21,000 BNPL scheme users paid their debt on time.
Meanwhile, she added that 12% of the users had overdue debt but were still capable of repaying, and less than 1% were not capable of repaying the debt.
'The total overdue debts due to BNPL is RM121.8bil,' she said during her winding-up speech on the Bill at the Dewan Rakyat on Monday (July 21).
There were 24 MPs who participated in the debate of the Bill following its second reading earlier.
Lim said that 70% of the total surveyed users were those of low income, with a monthly income of less than RM5,000.
The Consumer Credit Commission, operating as a statutory body under the Finance Ministry, would oversee currently unregulated sectors through a structured licensing and registration regime.
She said that under the Commission's framework, all BNPL scheme companies would be required to conduct financial evaluations on their credit consumers before approvals are given.
'This is to make sure that the credit users are capable of making repayment and avoid debt-trap.
'The Commission will also ensure BNPL industry-compliance on the financial evaluations requirement,' she added.
Lim added that as of June 30 there were a total of 16 BNPL service providers in Malaysia, with Shopee SPay Later, Atome and GrabPay Later holding over 95% of the market share.
She also said that there were currently four Shariah-compliant BNPL service providers, SPay Later, Boost PayFlex, Moby Islamic and Du-it.
Under the Commission's frameworks, Lim said that the BNPL providers will also be required to provide transparent information to the users, including credit terms, fees and charges before any credit services are offered.
'The government emphasise financial literacy to ensure the public is aware of the risks pertaining to BNPL,' she added.
Lim also said that BNPL providers are required to report the credit data of their consumers to credit reporting agencies, such as CTOS, via a centralised database.
The move was important to establish an integrated database of credit users, which would also include gig workers that do not have records at financial institutions, she added.
Intervention would also be done through the Credit Counselling and Debt Management Agency (AKPK) to further boost financial literacy and management among credit users.
Lim said that data would be collected before implementing any maximum ceiling of fees and credit to be provided.
'For the time being, in the first phase of the implementation of the Commission, there will be no maximum credit limit set.
'However, we will collect the data and decide in the following stages,' she said.
Lim said there would be no costs to the government for the implementation of the Bill during the first and second phases.
It was previously reported that the implementation will take place in phases. The first phase would see immediate regulation of credit providers by the Commission.
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