BANK NEGARA MALAYSIA CENTRAL BANK OF MALAYSIA 1 Ms Ooi See Eim Consumer and Market Conduct Department 9 September 2009 Financial Consumer Protection Malaysia’s Approach Conference on Promoting Financial Capability and Consumer Protection -A Step Forward towards Financial Inclusion in Africa Accra, Ghana
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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
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