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THE Dewan Rakyat today passed the Consumer Credit Bill 2025 in full, following its second and third readings without any amendments.
The landmark legislation introduces a unified legal framework for consumer credit and establishes a statutory Consumer Credit Commission under the Ministry of Finance.
Introducing the Bill, the Deputy Minister of Finance Lim Hui Ying said: “In line with the Government’s commitment to enhance the level of protection for all credit consumers in Malaysia, a comprehensive Consumer Credit Bill is proposed. On 4 March, the Bill was tabled for its first reading in the Dewan Rakyat.”
She underlined the inclusive policy-making process, which engaged ministries, government agencies, industry players, consumer associations and members of the public.
“The main objective of the Consumer Credit Bill is to protect the interests of credit consumers in the country by regulating all credit and credit service businesses; ensuring good conduct and responsible lending practices by credit industry participants; and promoting the development of a fair, efficient and transparent credit industry.”
Among the key risks addressed, she said, is the “clear gap created by the existence of unregulated industry players, whose businesses often target vulnerable credit consumers exposed to exploitation.”
“To reduce these risks, the Bill will regulate emerging credit providers such as Buy Now Pay Later (BNPL) schemes and unregulated credit service providers including debt collectors,” he added.
“BNPL transactions rose from 83.8 million in the second half of 2024 to 102.6 million in the first half of this year. The transaction value increased from RM7.1 billion to RM9.3 billion, marking a 31 per cent rise.
Meanwhile, active BNPL accounts rose from 5.1 million to 6.5 million.”
Lim warned that this significant growth in BNPL “may pose harm especially to vulnerable credit consumers, including those with irregular income, low income, or limited financial literacy”.
The deputy minister noted complaints over “debt collection practices involving coercion and excessive harassment,” as well as cases of intermediaries exploiting borrowers “under the guise of assistance”. She said, “many have urged that such parties be regulated”.
The Bill provides for the creation of the Consumer Credit Commission (Suruhanjaya Kredit Pengguna or SKP), which will operate under the Ministry of Finance as a statutory body. The Commission will oversee currently unregulated sectors via a structured licensing and registration regime.
Six categories of business fall under the Commission’s remit. Three types of credit businesses—BNPL schemes, leasing, and factoring (including Shariah-compliant operations)—will require SKP licensing. Three categories of credit service providers—debt collection, distressed loan acquisition, and debt counselling and management—must register with the SKP.
The Ministry of Housing and Local Government (KPKT) will be responsible for licensing Shariah-compliant financing and Islamic pawnbroking (Ar-Rahnu).
The regulatory transition will take place in phases. Under Phase 1, the SKP will immediately regulate unregulated credit providers, while KPKT will oversee Shariah-compliant financing and pawnbroking. In Phase 2, scheduled for 2028, oversight of moneylending and pawnbroking will transfer from KPKT, and hire-purchase and credit sales from the Ministry of Domestic Trade (KPDN), to the SKP. Phase 3, targeted for 2031, involves centralising conduct regulation across the financial market, subject to a Government review, she told lawmakers today.
“This phased approach ensures a smooth regulatory transformation and transition for the consumer credit industry while building SKP’s capacity and capability,” Lim added.
She confirmed that the definition of “credit consumer” in the Bill includes individuals borrowing for personal use, social guarantors, and micro and small enterprises with borrowings not exceeding RM300,000.
The Bill consists of 135 clauses across ten parts, along with seven schedules. It outlines the formation of the Consumer Credit Commission and its powers under Clause 7, including advising the Finance Minister, contributing to national policy, overseeing market conduct, and fostering an efficient credit system.
A Board of Directors will be appointed by the Minister to lead the Commission, which will fund its operations through industry contributions. Clause 27 allows other regulators (excluding KPKT and KPDN) to fund the SKP until 2030.
Other supervisory authorities recognised under the legislation include Bank Negara Malaysia (BNM), the Securities Commission (SC), the Cooperative Commission of Malaysia (SKM), KPDN and KPKT.
These bodies are encouraged to adopt and enforce the Bill’s consumer protection standards via guidelines and standards. An Advisory Committee will coordinate policy across ministries and agencies.
The SKP is required to license and register specified business categories, with applicants subject to “fit and proper” assessments, including governance standards and business viability.
Clause 81 stipulates that Shariah-compliant lenders must strictly observe Islamic finance principles under the oversight of BNM and SC’s Shariah Advisory Councils.
Clause 84 obliges industry players to uphold fair, responsible and professional conduct. Clause 85 mandates practices such as clear and truthful promotions, transparent pricing and terms, responsible lending, ethical debt collection, and financial hardship support.
Under Clause 86, lenders must consider repayment relief for borrowers facing hardship due to circumstances such as chronic illness, job loss or natural disasters.
The Bill grants SKP and regulators the authority to conduct inspections and investigations and establishes four enforcement pathways: administrative, civil, criminal, and compoundable offences. \
There are 57 offences listed, with the most serious carrying penalties of up to RM5 million- or five-years’ imprisonment—or both.
During the committee stage, all 135 clauses and seven schedules were accepted without alteration or debate.
Upon the Dewan Rakyat’s resumption, the Deputy Minister moved the third reading, stating: “I propose that the Consumer Credit Bill be read a third time and passed now,” the House passed the Bill by voice vote.
The legislation now awaits Royal Assent before becoming law, heralding a more equitable, responsible and transparent era for Malaysia’s consumer credit sector. - July 21, 2025
