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BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 1
Ms Ooi See Eim
Consumer and Market Conduct Department
9 September 2009
Financial Consumer ProtectionMalaysia’s Approach
Conference on Promoting Financial Capability and Consumer Protection
-A Step Forward towards Financial Inclusion in Africa
Accra, Ghana
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 2
Growing importance of Financial Consumer
Protection
Financial Consumers Protection Initiatives
Market conduct regulation
Market conduct supervision
Enhancing financial capability
Avenues to seek redress and help
Deposit insurance
Credit information database
Moving forward
Outline
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 3
Information
asymmetry &
level of transparency
Young generation
& attitude to credit
Ageing population
& increased life
expectancy
Low level of
financial literacy
Financial
scams
Changing delivery
channels
Growing consumer
debt & reduced
household savings
Easy access
to credit
Innovative &
complex financial
products
Growing Importance of Financial Consumer Protection
Challenges Facing
Consumers
Promotion of sound market conduct practices supported by appropriate
consumer protection and education policies is increasingly on the agenda
of financial regulators
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 4
Enhance
redress
mechanism
• Public confidence in financial sector
• Well-informed and empowered consumer
Regulatory
Objectives
Legislation &
principle-based
regulation
Promote self-
regulation in
industries
Supervisory &
enforcement
powers
Consumer
education
programme
Greater transparency
and improved
disclosure
Foster sound business
practices by financial service
providers and intermediaries
More comprehensive
consumer protection
framework
Strategic
Goals
Regulatory
Approach
Malaysia’s Approach
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 5
TE
XT
Market conduct regulation
Market conduct supervision
Enhancing financial capability
Avenues to seek redress & help
Deposit insurance
Robust
Financial
System
Market
Confidence
Financial Consumers Protection Initiatives
Credit information database
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 6
Objectives:
• Strengthening market conduct practices
• Ensuring fair treatment of financial consumers
• Enhancing financial capability of consumers
Regulatory Policy
Formulate policies
& regulations on
conduct of
financial service
providers
Market Conduct
Supervision
Conduct
surveillance &
enforcement for
breach of market
conduct
requirements
Financial
Capability
Enhancing financial
capability of
consumers
Intermediaries &
Operations
Oversee & ensure
orderly
development of
financial
intermediaries
Scope of
Mandate:
1. Conventional banks
2. Islamic banks
3. Insurers
4. Takaful Operators
5. Payment Instrument Issuers
Market Conduct Regulation and Supervision- Bank Negara Malaysia’s Role
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 7
Enhance legislative
framework for market
conduct
Strengthen Market
Conduct Regulatory Regime
Fair Treatment
of Consumers
& Market
Integrity
Fair & equitable market
practices by Intermediaries
Marketing of credit cards
Reprimand & Penalties
Surveillance &
Enforcement
Market conduct examination
Enhance product
disclosures
Market Conduct Regulation
Rationalize fees & charges
Fair contract terms review
Incognito visits
Consumer complaints
Name & Shame
Licensing & regulation of:
• Money brokers
• Insurance brokers
• Adjusters
• Financial advisers
Fair debt collection
Market Conduct Regulation and Supervision- Fair Treatment of Consumers & Market Integrity
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 8
Objectives:
To provide
consumers with
relevant
information for
making
informed
financial
decisions
To facilitate
comparison of
financial
products and
services by
consumers
Effective product disclosure is necessary to:
Address information asymmetries between
consumers and financial services providers
Enhance consumers’ understanding of financial
products and services, thereby reducing mis-selling
Promote consumer participation in the financial
services industry
Improve standards of transparency in the financial
industry
Maintain long-term market confidence in
financial markets
Market Conduct Regulation- Product Transparency & Disclosure
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 9
Basic Banking Services
Framework
Guiding Principles on Imposition of Fees and
Charges
Market Driven Fees and Charges
LA
YE
R 1
LA
YE
R 2
LA
YE
R 3
A balanced approach is adopted
between market driven and
setting regulatory control
Allow BIs to impose charges in
accordance to guiding principles
– BNM reserves the right to
moderate charges that are
deemed excessive
This approach is complemented
by other market conduct
initiatives
Market Conduct Regulation- Rationalise Fees and Charges
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 10
Market Conduct Regulation- Access to Financial Products & Services
Objective:
To ensure that customers can enjoy a
minimum level of banking services at
reasonable costs
Measures:
All BIs are required to offer a basic savings
account (BSA) and a basic current account
(BCA) to all Malaysians
SMEs are also eligible to open BCAs
Provides a minimum level of services and
transactions at minimal costs
To ensure charges imposed on individuals and
SMEs are reasonable
Effective 23 March 2009, the minimum
interest rate payable on BSA shall not be
lower than 0.25% per annum
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 11
Market
Conduct
Supervision
• Surveillance to determine compliance with consumer
protection laws, regulations, guidelines and circulars
• Enforcement action against non-compliant financial service
providers
EnforcementWork
Process
Identify
areas of
focus
Conduct
surveillance
Monitor
corrective
actions
Consultation
Sources
• Complaints
• Media
• Allegations
• Market
Intelligence
• Data review
• Self-
assessment
Method
• Thematic
examination
• Incognito
visits
• Media watch
• Surveys
• Investigations
Method
• Active
consultation
with
relevant
parties
Method
• Reprimand
letter
• Compliance
agreement
• Notice of
violation
• Fine/penalty
• Restraining
order
• Name & Shame
Method
• Monitor &
verify
action
taken by
financial
service
providers
Market Conduct Supervision- Surveillance and Enforcement Framework
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 12
Outreach
ProgrammeRural folks,
women, university
students, person
with disability
School
ProgrammePrimary
and secondary
Students
(>10,000 schools)
Provision of
InformationGeneral
Public
• Develop and disseminate
information materials on
financial products and
money management
• Selected materials are
available in Braille
Briefing and
workshop
sessions,
financial
exhibitions
Promote money
management
through school
adoption
programme in
collaboration
with Ministry of
Education
• Launched 2 consumer
education programme in
2003:
• bankinginfo
• Insuranceinfo
Enhancing Financial Capability
Three-pronged approach
Objective: To raise consumer activism through a structured consumer
education programme
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 13
bankinginfo - 24 materials published
A progressive financial system requires financially savvy consumers who:
are able to make informed financial decisions
know their rights and responsibilities
insuranceinfo - 25 materials published
Enhancing Financial Capability- www.bankinginfo.com.my & www.insuranceinfo.com.my
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 14
.
.
duitsaku.com
An interactive financial education tool
to enhance financial literacy among
students
Other Tools & Resources
Students Financial Clubs
Lesson Plan for teachers
Workshop for teachers and students
.
Pocket Money Book
A learning tool to inculcate the
culture & habit of smart personal
money management among
students at a young age
Enhancing Financial Capability- Pocket Money Book & duitsaku website
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 15
Complaints
Unit @ FSPs
& BNM
Credit Counseling And Debt Management Agency www.akpk.org.my
Financial Mediation Bureauwww.fmb.org.my
Small Debt
Resolution
Scheme
SME Special Units
at FSPs & BNM –
assist SMEs on
financing
www.smeinfo.com.my
Avenue to seek
redress and help
Contact details on
BNM website
Avenues for Redress & Assistance
ABM Connect
Integrated Contact Centre
• BNMLINK
• BNMTELELINK
• Complaints Management
& Advisory
The Association of Banks in Malaysiawww.abm.org.my
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 1616
Deposit Insurance System
Deposit insurance
• A system established by the
Government to protect
depositors against the loss of
their insured deposits placed
with banks
• Depositors will be reimbursed
promptly on their insured
deposits in the unlikely event of
a bank failure
• The deposit insurance system in
Malaysia is managed by MDIC
(locally known as PIDM)
Malaysia Deposit Insurance Corporation (MDIC)
Objectives of MDIC
• Provide protection for depositors
on their deposits placed with
banks
• Reimburse depositors on their
deposits in the unlikely event of a
bank failure
• Provide incentives for sound risk
management in the financial
system
• Promote and contribute to the
stability of the financial system
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 1717
Deposit Insurance System (cont’d)
Member banks
• Commercial banks
• Islamic banks
Other guaranteed financial
institutions
• Investment banks
• International Islamic banks
• Deposit-taking DFIs regulated by BNM
For more information
• Visit MDIC’s website at
www.pidm.gov.my
Coverage
• With effect from 16 October 2008,
all deposits held in member banks
and certain financial institutions
are fully protected until 31
December 2010 under the
Government Deposit Guarantee.
• Current plans are to revert to an
explicit and limited coverage
deposit insurance system when the
Government Deposit Guarantee
expires.
Malaysia Deposit Insurance Corporation (MDIC)
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 18
Provide credit information to fin. institutions to:
• Facilitate credit assessment of customers
• Facilitate credit risk management
• Promote more efficient credit process
Provide credit information to BNM to:
• Facilitate regulation & supervision
• Analytical purposes –financial surveillance
Inculcate good credit culture
The Central Credit
Reference
Information
System - CCRIS
• A real-time on-line database system
• Processes & collates credit information
• Credit reports for borrowers / fin. institutions
Objectives
of CCRIS
Credit Information Database
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 19
To strengthen the legislative framework to support a comprehensive and effective regulatory and supervisory market conduct regime
• Amendments to relevant legislations to empower BNM to prescribe and enforce standards of fair and equitable market practices in the banking and insurance industry
• Greater role for market discipline and self-regulation in ensuring sound market conduct practices
• More efficient regulatory framework for intermediaries to balance the cost of regulation with its risks
• Introduction of Ombudsman law
– Provide consumers with an enhanced alternative avenue for redress in their dealing with financial service providers
• Intensify market conduct surveillance activities
Moving forward
BANK NEGARA MALAYSIACENTRAL BANK OF MALAYSIA 20
THANK YOU