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The Consumer Credit Oversight Board (CCOB) has released its second public consultation paper (CP2) on the proposed regulatory framework for credit businesses in Malaysia. The CCOB is seeking feedback from the public on the proposed regulations, which will provide further details on the implementation of the Consumer Credit Act (CCA). The CCA is expected to be enacted by the end of this year.

The focus of the CCOB in Phase 1, from 2024 to 2025, will be on non-bank credit providers and service providers that are currently unregulated. This includes businesses that offer Buy Now Pay Later (BNPL) services. Non-bank credit providers that are already regulated by a Regulatory and Supervisory Authority (RSA) will not be required to seek authorisation from the CCOB in this phase.

In assessing an application for authorisation, the CCOB will examine four criteria: organisational structure, shareholding composition, financial resources, and qualification and competencies of key personnel. The proposed regulations also require credit providers and credit service providers to have sufficient financial resources commensurate with the nature, complexity, and scale of their business. The proposed minimum financial requirement for BNPL firms is RM2 million of shareholder funds.

Industry players are expected to submit their data digitally via a one-stop portal that will take into consideration the different consumer credit business requirements. This will be an integrated complaints system driven by an Application Programming Interface (API) that will be freely accessible to industry players to ease regulatory costs and reporting obligations. The API-powered platform will also publish information on regulated industry players, allowing the general public to validate their credibility.

The CCOB is also seeking to ensure that advertisements and promotional material on credit or credit services are clear and not deceptive. Credit providers will have to conduct an affordability assessment on consumers before entering into an agreement with them or increasing the amount of credit provided. They will need to obtain information such as their financial means, outstanding debt obligations, and repayment history from reliable sources such as registered credit reporting institutions.

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. To do so, you can visit the CCOB website to use the feedback form feature or email [email protected]. This is an opportunity for the public to have a say in shaping the regulatory framework for credit businesses in Malaysia, which will help ensure responsible lending practices and protect consumers.