LETTER | The Consumers’ Association of Penang (CAP) welcomes the statement by the Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus (photo, above) that a Consumer Credit Act could finally be part of our Malaysian legislation, starting sometime next year.

CAP has been championing the implementation of a comprehensive Consumer Credit Act close to two decades now.

In the year 2004 CAP published a memorandum on the need for a Consumer Credit Act focusing on problem areas in transactions, such as hire purchase, money lending, credit sales (e.g. Courts Malaysia, Singer, etc), pawnbroking, cooperative loans, credit cards and personal loans.

The main idea of a Consumer Credit Act should be that it encompasses all areas of consumer credit and it must be directed towards consumer protection. This is what we advocated in our memorandum.

Over the years, there have also been certain initiatives by the Ministry of Domestic Trade and Consumer Affairs to engage with NGOs on this matter. One such engagement session that CAP attended was held in 2011, but ultimately it did not bear any tangible results on enacting a Consumer Credit Act.

However, in April of this year, we attended another engagement session with the Domestic Trade Ministry to discuss suggestions for the proposed Consumer Credit Act, which was very promising.

Our continued research on the matter has shown that many countries that have a Consumer Credit Act are very specific with provisions that truly protect consumers.

We hope that Malaysia’s Consumer Credit Act will mirror that and not just be used to consolidate all the existing provisions under the various laws that deal with borrowing/lending, as some of these provisions can be very vague.

A few suggestions we have that we would like to briefly mention include:

Having a cooling off period for all types of loans;
Lending facilities should give detailed loan accounts that the layman can understand;
Having provisions that stop consumers from losing out when collateral or repossessed goods have been auctioned;
Getting rid of a flat rate method of interest calculation;
Including credit reporting agencies in the Consumer Credit Act;
Making early loan repayment worthwhile for consumers; and
Having heavier penalties for banks and repossessors that do not follow the law in the process of repossessing motor vehicles.

Being an association geared towards aiding people with consumer problems, we have received our fair share of borrowing/lending oriented complaints, which include:

Banks and repossessors circumventing the law in the repossession of motor vehicles under hire purchase transactions;
Bankers selling investment-linked insurance without explaining that the bulk of the money (usually taken from fixed deposits) will be used for the insurance part;
Unwittingly borrowing from the Ah Long, believing that they are licensed money lenders; and
Not being able to pay off loans according to schedule because of skewed interest rate calculations and so much more.

The current lack of proper legislation to deal with consumer credit issues has caused low-income earners to be exploited by “sharks”.

As such, we iterate our hope that the statement by the Bank Negara governor will be given legal force and that come next year, our consumers will finally be properly protected when they must resort to borrowing from lending institutions.

MOHIDEEN ABDUL KADER is the acting president of the Consumers’ Association of Penang (CAP)

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