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ShopBack wants regulator to conduct focus group discussions with buy now, pay later industry

08/08/2022 03:30 PM

By Nurunnasihah Ahmad Rashid

KUALA LUMPUR, Aug 8 (Bernama) -- A buy-now-pay-later (BNPL) service provider has proposed that the regulator of the Consumer Credit Act (CCA) conduct focus group discussions with the industry so that practical operational feedback can be gathered for a consultation paper on the Act.

In response to Bernama on the enactment of the CCA, which is being worked on at present, 

 ShopBack PayLater, ShopBack Malaysia general manager Jason Wong also recommended an appropriate transition period be considered to provide ample time for the industry to ramp up its efforts to meet the expectations of the regulator.

The CCA is expected to be presented in the second quarter of 2023 to ensure the stability and growth of the financial system.

The Act will be administered by the Consumer Credit Monitoring Board under the Ministry of Finance.

“Efficient regulation is essential. Hence ShopBack hopes that a close working relationship between the regulator and the industry would put the industry in a better shape to cater for the under-served and under-banked segments,” he said.

A consultation paper on the Act revealed that there is a growing number of unregulated players in the consumer credit space, including BNPL companies, non-bank factoring and leasing companies, impaired loan buyers (ILB) and debt collection agencies (DCA).

Based on a survey conducted on 10 non-bank BNPL providers, the BNPL market’s transaction value skyrocketed to RM1.49 billion in 2021 from RM55 million in 2020, while the global BNPL industry is estimated to be worth around US$157 billion (RM699 billion).

The growth means greater risks of unfair or predatory practices that often target vulnerable households and small business consumers. 

“As they grow in scale, bringing these players within the regulatory remit will help to better protect credit consumers and ensure the orderly development of consumer credit industry going forward,” it said.

Malaysia's household debts rose to RM1.375 trillion as of end-2021, from RM1.27 trillion in 2020.

Therefore, Wong hopes that the government’s effort in enacting regulations be coupled with financial education and awareness to ensure prudent spending by the consumers and the overall effectiveness of the requirements under the Act.

“The regulator’s decision is seen as a step forward for the overall industry as it will safeguard consumer interests and prevent the risk of over-indebtedness.

“We highly welcome the regulator’s efforts as we believe a single framework could bode encourage fair competition across the various industries while protecting consumers from unfair practices and enhancing our credibility as well as fostering consumers’ confidence when dealing with us.

“With the enactment of the CCA, BNPL providers will be subjected to authorisation and market conduct requirements,” he said.

Wong said the company is always striving to enhance its internal processes and procedures, therefore, the consultation paper would give ShopBack an initial view of the regulator’s expectations. 


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