BNM says working with MoF, SC to regulate 'Buy Now Pay Later’ schemes

BNM says working with MoF, SC to regulate 'Buy Now Pay Later’ schemes
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KUALA LUMPUR (March 30): Bank Negara Malaysia (BNM) said it is working together with the Ministry of Finance (MoF) and Securities Commission Malaysia (SC) to enact the Consumer Credit Act in 2022 to strengthen regulatory arrangements for all consumer credit activities including "Buy Now Pay Later" (BNPL) schemes offered by non-bank operators.

In BNM's 2021 Annual Report, which was published on Wednesday (March 30), the central bank said BNPL schemes offered by non-bank operators currently do not fall within the regulatory purview of BNM or any regulatory agency.

“To further mitigate the risks that BNPL schemes may encourage consumers to spend beyond their means, we have also worked with the Financial Education Network to educate the public on the risks of using BNPL schemes.

“Beyond the regulated activities, the bank (BNM) also monitors new market developments to ensure they do not pose any undue risks to the public.

“One such emerging development is BNPL schemes. It allows customers to make payments in instalments with zero interest.

“However, there may be other charges levied by BNPL providers on the customers (e.g. processing fees and late-payment fees),” BNM said.

The central bank said that in some cases, the total charges levied by BNPL providers on customers may be higher than the total interest and charges imposed by conventional lenders.

According to BNM, for BNPL schemes offered by or in partnership with banking institutions, the banking institutions are expected to observe practices that are consistent with responsible lending expectations.

Read more stories from the BNM Annual Report 2021 here.

Chong Jin Hun