The Consumer Credit Bill 2025 (“the Proposed Act”) was passed by the Dewan Rakyat (House of Representatives) of the Malaysian Parliament on 21 July 2025. It will now continue its legislative journey towards becoming law.¹
 
The Proposed Act seeks to, among others, establish the Consumer Credit Commission (“Commission”), protect the interests of credit consumers, promote proper conduct and responsible lending practices and promote a fair, efficient and transparent credit industry.
 
Key Definitions
 
For the purposes of the Proposed Act:

The Consumer Credit Commission
 
Clause 6(1) of the Proposed Act establishes the Commission. Its functions include: (a) advising the Minister on all matters relating to consumer credit; (b) advising the Government on national policy involving consumer credit; (c) promoting proper conduct among credit providers and credit service providers; and (d) promoting the development of the consumer credit industry.
 
The powers of the Commission include, among others: (a) regulating all matters relating to consumer credit; (b) regulating and supervising persons who carry on credit business and credit service business regulated by the Commission; (c) examining the business and affairs of a credit provider or credit service provider regulated by the Commission; and (d) specifying standards or guidelines on matters relating to consumer credit regulated by the Commission.
 
Regulatory and Supervisory Authority
 
Each of the following is a Regulatory and Supervisory Authority (“RSA”) under Part III of the Proposed Act: (a) the Commission; (b) Bank Negara Malaysia (“BNM”); (c) the Securities Commission Malaysia (“SC”); (d) the Ministry of Domestic Trade and Cost of Living (“KPDN”); (e) the Ministry of Housing and Local Government (“KPKT”); and (f) the Malaysia Co-operative Societies Commission (“SKM”).
 
An RSA has all functions to regulate and supervise the persons carrying on credit business and credit service business as set out in Schedules 2 and 3 respectively of the Proposed Act which are regulated by that RSA. To determine which credit business comes under a particular RSA, one would have to refer to the statute that regulates such activity. For example, the RSA that exercises regulatory or supervisory oversight of hire purchase business under the Hire-Purchase Act 1967 would be the KPDN.
 
The powers of an RSA include: (a) examining the business and affairs of a credit provider or credit service provider regulated by the RSA; (b) specifying standards or guidelines and issuing guidance under sections 123 and 125 respectively of the Proposed Act; and (c) investigating matters relating to credit business or credit service business regulated by that RSA.
 
Licensing and registration
 
Part V of the Proposed Act sets out the licensing and registration requirements for any person who carries on or intends to carry on credit business and credit service business under the Proposed Act. It also sets out several key requirements that have to be complied with in relation to the control and management of such businesses.
 
Licensing
 
A person proposing to carry on any of the following credit business must obtain a licence issued by the Commission, namely: (a) buy now pay later scheme; (b) leasing; (c) factoring; (d) Islamic buy now pay later scheme; (e) Islamic leasing; or (f) Islamic factoring, whereas a person proposing to carry on any of the following businesses must obtain a licence from the Registrar of Islamic credit providers⁵ (“Registrar”): (a) Islamic financing facility; or (b) Islamic pawnbroking.
 
Registration
 
A person proposing to carry on any of the following credit service business must be registered with the Commission, namely: (a) debt collection; (b) impaired loan or financing acquisition; or (c) debt counselling and management.
 
Requirements for Licensing or Registration
 
The Commission or Registrar, as the case may be, may grant a licence to or register an applicant where it is satisfied that the applicant: (a) meets the minimum financial requirements to be specified under section 44 or 61 of the Proposed Act; and (b) complies with any regulations, standards or guidelines, or other requirements relating to licensing or registration under the Proposed Act or conditions as may be specified by the Commission or the Registrar, as the case may be.
 
The requirements include fulfilling fit and proper requirements by the controller, directors and senior management.
 
Appointment / reappointment of chief executive
 
The prior written approval of the Commission must be obtained for the appointment or reappointment of a chief executive of: (a) a licensed credit provider regulated by the Commission;  or (b) a registered credit service provider.
 
Controller
 
The prior written approval is required from the Commission or the Registrar, as the case may be, for a person to have control over a licensed credit provider or registered credit service provider. A person is deemed to have “control” if he: (a) is entitled to exercise, or control the exercise of, not less than 33% of the votes attached to voting shares; or (b) has power to appoint, or cause to be appointed, a majority of the directors; or (c) has the power to make, or cause to be made, decisions in respect of the business or administration of a licensed credit provider or registered credit service provider, as the case may be, and to give effect, or cause to be given effect, to such decisions.
 
Acquisition of interest in shares
 
The prior written approval of the Commission is required for a person to acquire (including entering into an agreement or arrangement to acquire) interest in shares⁶ which will result in such person holding, together with any interest in shares already held by him, interest in shares of 33% or more in a licensed credit provider or a registered credit service provider.
 
Transfer and use of licence or registration
 
A licensed credit provider and a registered credit service provider are prohibited from: (a) transferring or assigning its licence or registration, as the case may be, to any other person; and (b) causing or permitting any other person to use its licence or registration to carry on the credit business or credit service business specified in the licence or registration, as the case may be.
 
Sale, disposal or lease of business
 
A licensed credit provider and a registered credit service provider shall not: (a) sell, dispose of, lease, assign or transfer the whole or any part of its credit business or credit service business, as the case may be, to any other person; or (b) amalgamate or merge its credit business or credit service business, as the case may be, with any other person, without the prior written approval of the Commission.
 
Special provisions relating to Islamic credit business
 
Part VI of the Proposed Act sets out additional provisions relating to Islamic credit business⁷. Among others, an Islamic credit provider must at all times ensure its Islamic credit business and activities, and its management of such business and activities, comply with Shariah.
 
An Islamic credit provider may, through its RSA, seek the advice or ruling of the Shariah Advisory Council⁸ on Shariah matters relating to its Islamic credit business or activities which require ascertainment of Islamic law, and its compliance with any advice or ruling of the Shariah Advisory Council shall be deemed to be compliance with Shariah in respect of that business or activity.
 
Dispensation with licensing and registration
 
A person is not required to apply for a licence or registration under Part V of the Proposed Act if he carries on any of the following credit business or credit service business that does not involve a credit consumer: (a) buy now pay later scheme; (b) leasing; (c) factoring; (d) Islamic buy now pay later scheme; (e) Islamic leasing; (f) Islamic factoring; (g) debt collection; (h) impaired loan or financing acquisition; or (i) debt counselling and management. Instead, such person is required to submit a declaration to the Commission of such fact, in the form and manner as may be specified by the Commission, together with such document or information as may be specified by the Commission.
 
Agreement with unlicensed credit provider unenforceable
 
An agreement under which credit is given and purporting to be a credit agreement entered into by a credit consumer and an unlicensed credit provider shall be unenforceable.
 
Presumptions
 
Where it is alleged in any court proceedings that a person is a credit provider or credit service provider, the proof of a single credit transaction or single service by that person shall raise a presumption that such person is carrying on the business of providing credit or credit service, as the case may be, to a credit consumer until the contrary is proven.
 
Business conduct for credit consumer protection
 
Ensuring fair, responsible and professional business conduct
 
The Proposed Act requires a credit provider or credit service provider to manage and carry on its credit business or credit service business in a fair, responsible and professional manner when dealing with credit consumers. For this purpose, regulations and standards or guidelines issued under sections 122 and 123 respectively of the Proposed Act may include, among others: (a) prohibited business conduct; (b) promotion and advertisement for any credit business or credit service business; (c) fairness of terms in a credit agreement; (d) imposition of interest, profit, fees or charges; (e) provision of assistance to a credit consumer having financial hardship in meeting its financial obligations under a credit agreement; (f) affordability assessment of credit consumers; (g) fair debt collection practice; and (h) complaints handling.
 
Section 87 of the Proposed Act prohibits a person from engaging in conduct set out in Schedule 6, which among others, includes: (a) misleading or deceptive conduct; (b) inducing or attempting to induce a credit consumer to do an act or omit to do an act in relation to any credit product or service; (c) exerting undue pressure, influence or using or threatening to use harassment, coercion or physical force in relation to the offer of, or payment for, any credit product or services; and (d) demanding payments from a credit consumer for unsolicited credit product or services.⁹
 
Enforcement Actions
 
Civil Enforcement Actions
 
As in the case of the Financial Services Act 2013 and the Islamic Financial Services Act 2013, the Proposed Act confers power on the RSA¹⁰ to commence civil enforcement actions against a person who has failed to comply with any provision under the Proposed Act or any regulation, order, direction, standard, guideline, condition, restriction, specification or requirement thereunder.
 
Upon the application of the RSA, the Court may, among others, order the defaulter to pay: (a) an amount not exceeding three times the gross amount of the pecuniary gain made or loss avoided by the defaulter as a result of the contravention, breach or non-compliance; or (b) the amount of money which is the subject matter of the contravention, breach or non-compliance; and (c) a civil penalty not exceeding RM500,000.
 
The Court may also: (a) restrain the defaulter from engaging in any specific conduct or to cease the contravention, breach or non-compliance; or (b) direct the defaulter to do a particular act or take steps to mitigate the effect of the contravention, breach or non-compliance.
 
The Court may, in certain circumstances, also issue orders against: (a) a director, controller, office or partner or other person purporting to act in such capacity or a person who is concerned with the management of the affairs of a body corporate or unincorporate; and (b) a body corporate or unincorporate for a contravention, breach or non-compliance by a person who is its director, controller, officer or partner or a person concerned with the management of the affairs of the body corporate or unincorporate.
 
Liability for criminal offences
 
Part IX of the Proposed Act imposes corporate criminal liability, making a body corporate or unincorporate liable for offences committed by: (a) its director, controller, officer or partner or other person purporting to act in such capacity; or (b) a person who is concerned with the management of its affairs. These individuals may also be prosecuted in their personal capacity, regardless of whether the body corporate or unincorporate has been prosecuted or convicted.
 
Implementation
 
According to the Consumer Credit Oversight Board¹¹, the Proposed Act will be implemented in three phases:
 
Phase 1 (upon enforcement of the Proposed Act – 2025 to 2027) where:

Phase 2 (2028 to 2030)
 
The regulatory powers of the KPKT and the KPDN will be transferred to the Commission and the Moneylenders Act 1951, Pawnbrokers Act 1972 and the provisions relating to credit sales transactions under the Consumer Protection Act 1999 will be repealed and the relevant provisions of those Acts will be incorporated into the Proposed Act.
 
Phase 3 (2031 onwards)  
 
It is envisioned that in the next five to ten years, Malaysia’s financial industry’s regulatory architecture will be evolve towards the ‘twin peaks’ model whereby financial regulation will be separated into two broad functions, namely market conduct regulation (including consumer protection) and prudential regulation.
 
According to a statement by Deputy Finance Minister, Lim Hui Ying, Phase 3 will also involve the centralisation of conduct regulation for all financial markets activities in Malaysia¹².
 
Comments
 
The presentation of the Proposed Act to the Malaysian Parliament represents the culmination of over four years’ work by the Consumer Credit Oversight Board Task Force, which is spearheaded by the Ministry of Finance, BNM and SC in close collaboration with the KPDN, KPKT, SKM and the Ministry of Entrepreneur and Cooperatives Development.
 
The Proposed Act seeks to enhance protection for credit consumers by introducing a coherent and coordinated framework for regulating conduct across the various sectors of the non-bank credit providers and credit service providers which are presently regulated by different regulatory bodies and ministries or are presently unregulated. It is hoped that the regulation of all non-bank credit providers and credit services providers will eventually be placed under a single regulatory authority for greater efficiency and more expeditious implementation of laws and standards that will be introduced to regulate the conduct of businesses involved in these activities.
 
Businesses involved in the affected sectors should familiarise themselves with the relevant licensing and registration requirements as well as the ongoing compliance requirements set out in Part V of the Proposed Act. As details of market conduct regulation will only be unveiled when the guidelines and standards are issued, it is hoped that drafts of these documents will be released to assist affected businesses to familiarise themselves with the requirements before they are enforced.
 
Postscript: Prior to the introduction of the Proposed Act, the Consumer Credit Oversight Board Task Force had issued two consultation papers on 4 August 2022 and 5 April 2023. The consultation papers can be accessed here and here.¹³ The second consultation paper contains discussions on some market conduct, e.g. fairness of terms and affordability assessment, that will be regulated under the guidelines and standards to be issued.
 
Article by Sheba Gumis (Partner), Lee Ai Hsian (Partner) and Faith Chan (Senior Associate) of the Corporate Practice of Skrine.
 
 

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