Financial consumer in Malaysia: Regulators efforts and measurements for consumer protection

Abstract

The public (or retail) consumer is a very important aspect in any financial market. Although they do not provide the bulk of the financing income compared to business consumers or corporations, they make up in terms of quantity and is an essential contributor to the performance of any financial institution. However, financing retail consumers are very much fragile and volatile in nature due to their inability to gasp their own financial capability as well as the tendency to overextend their credit limit which may create problems in the future and affect their ability to pay their financing. This in turn, creates problems for the financial institutions making the recovery process very lengthy and expensive. With that in mind, it is imperative that the retail consumers are educated and taught the proper ways to manage their credit and protect themselves against the inability to pay their financing. Thus, the purpose of this chapter is to highlight the importance of consumer protection and the means that have been put in place by the central bank of Malaysia, Bank Negara Malaysia (BNM) to help increase customer awareness and financial literacy in Malaysia. This chapter will also highlight the challenges that are faced in consumer protection and efforts that have been made to improve consumer protection. This chapter found that the highest percentage of loan approved in Malaysia are loans from the household sector and despite the measures to increase financial literacy and consumer awareness that have been put in place by BNM, there has been a steady increase of bankruptcy cases and scam victims for the past years in Malaysia. It would be interesting to see the impact of the measures put in place by FSA 2013 and IFSA 2013 on financial institutions and retail consumers and it is recommended that a more stringent regulative framework be put in place to address the increase in bankruptcy and scam scandals among the working population.