Financial Consumer Protection - Home: MFW4A · Financial Consumer Protection ... Three-pronged approach Objective: ... Lesson Plan for teachers Workshop for teachers and students

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


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


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


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


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


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


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


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


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


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


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


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


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


.

.

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


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

http://www.fmb.org.my/index.htm


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


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)


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


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


THANK YOU

Documents

Financial Consumer Protection - Home: MFW4A · Financial Consumer Protection ... Three-pronged approach Objective: ... Lesson Plan for teachers Workshop for teachers and students