The long-anticipated Consumer Credit Bill 2025 (“Bill”) was finally tabled for first reading on 4 March 2025 in the Dewan Rakyat. The Bill is part of the government’s effort to enhance consumer protection in the credit sector, especially in light of the Buy Now, Pay Later (“BNPL”) boom.
While the fate of the Bill is still to be determined by the second reading that is scheduled to take place during the next June-August parliamentary session (and possibly further reading and debate after), we have had the opportunity to take a quick look at the draft Bill in its current form, and here is what we know so far.
1. Scope of the Consumer Credit Bill 2025
The Bill primarily seeks to regulate 2 types of businesses:
(i) Credit Business, which entails the following:
(a) Moneylending;
(b) Pawnbroking;
(c) Hire purchase;
(d) Credit sale;
(e) BNPL scheme;
(f) Leasing; and
(g) Factoring.
(ii) Credit Service Business, which entails the following:
(a) Debt collection;
(b) Impaired loan or financing acquisition;
(c) Repossession;
(d) Debt counselling and management; and
(e) Online crowdlending platform.
2. Applicability of the Consumer Credit Bill 2025
The Bill will essentially apply to any person carrying on either credit business or credit service business in Malaysia, where the business offerings thereunder involve dealings with “credit consumer”.
“Credit consumer” refers to the following groups of people under the Bill:
(i) An individual obtaining credit for personal, domestic or household purposes;
(ii) A micro or small enterprise obtaining credit that is below a certain threshold to be determined by the Consumer Credit Commission;
(iii) Any other class, category or description of person as may be specified by the Consumer Credit Commission; and
(iv) An individual acting as social guarantor to any of the groups of credit consumers mentioned above.
The term “credit” is further defined under the Bill as any arrangement, agreement or facility which results in a person being in debt or incurring a financial obligation; or which allows the payment for goods or services sold to a person to be made in instalments.
In other words, the Bill will only be applicable to provider of credit business or credit service business in Malaysia who are dealing with the groups of credit consumers defined under the Bill. If you are operating credit business or credit service business but you are not engaging with any credit consumer, then the Bill is generally not applicable to you.
3. Supplementary to Existing Credit Related Laws
The Bill, once passed, will not repeal the other existing laws of Malaysia that also govern some of the credit businesses, such as the Hire-Purchase Act 1967, Consumer Protection Act 1999, Moneylenders Act 1972 and Pawnbrokers Act 1982.
In fact, credit business providers who are already regulated under existing laws in Malaysia will have to observe the additional obligations sought to be imposed under the Bill.
4. Licensing and Registration Requirements
If and when the Bill is passed, the providers of the following credit businesses and credit service businesses will have to either apply for a license or register themselves with the relevant authorities:
(a) Debt collection; (b) Impaired loan or financing acquisition; and (c) Debt counselling and management.
Failure to obtain the requisite license or registration is a serious offence under the Bill and may attract fine up to RM5 million and/or imprisonment up to 5 years.
5. Minimum Financial Requirements
Any person intending to be a licensed or registered credit business provider or credit service business provider will have to fulfil certain minimum financial requirements pursuant to the Bill.
At this juncture, the type and amount of minimum financial requirements are still unspecified. It is however likely to come in the form of a minimum paid up capital.
6. Fit and Proper Requirements
A licensed credit provider and registered credit service provider may be required to observe certain fit and proper requirements in respect of its shareholder(s), director(s), partner(s) or senior management personnel(s).
At this stage, the extent of which the fit and proper requirements would apply is still uncertain, but it will likely include minimum criteria relating to:
(i) Probity, personal integrity and reputation; (ii) Competency and capability; and (iii) Financial integrity.
7. Change in Control Restrictions
The Bill also seeks to impose some form of change in control restrictions on the part of licensed credit providers and registered credit service providers.
Depending on the type of credit business or credit service business provided, a person can freely acquire interest in shares of a licensed credit provider or registered credit service provider up to 4.9% or 32.9%. Acquisition of shares beyond this level will require the prior written approval of the relevant authorities.
8. Further Conditions of Licensing and Registration
In granting a license or registration in accordance with the Bill, the relevant authorities may impose further conditions to be observed by the licensees or registrants.
At this juncture, it is still unclear what sort of additional licensing or registration conditions may be imposed. Taking cue from existing legislations that also govern credit businesses in Malaysia, we can potentially expect the regulators to introduce restrictions on maximum term charges, processing fees and late payment charges.
With the BNPL business gaining more tractions here in Malaysia, and with industry players looking to introduce other types of innovative consumer credit products and services, it is high time for the Malaysian government to finally introduce the Bill to regulate the consumer credit market. After all, when it comes to incurring of debts and liabilities, there should definitely be some form of protections afforded to consumers.
Along with the advancement of technology, those operating in the consumer credit market are also constantly looking to incorporate innovations in their business offerings, leveraging technology in offering their financial products or consumer credit products to the public. Credit providers and credit service providers are urged to pay close attention to the development of the Bill in Malaysia, as their business models will certainly be substantially impacted by the Bill once it is passed.
◦ The Technology Practice Group at Halim Hong & Quek frequently advises and represents companies in relation to financial technology or FinTech matters, including BNPL scheme, factoring service and earned wage access that utilise technology in their offerings. If you are interested to know more about the Consumer Credit Bill 2025 or if you need any legal assistance with regard to your FinTech business, please do not hesitate to reach out to the Technology Practice Group. Halim Hong & Quek has been awarded Fintech Law Firm of the Year in 2024 and ranked as Tier 3 in Fintech and financial services regulatory by Legal 500, Band 2 in Fintech by Chambers and Partners
About the authors
Lo Khai Yi Partner Co-Head of Technology Practice Group Technology, Media & Telecommunications (“TMT”), Technology Acquisition and Outsourcing, Telecommunication Licensing and Acquisition, Cybersecurity [email protected].
◦
Ong Johnson Partner Head of Technology Practice Group Technology, Media & Telecommunications (“TMT”), Fintech, TMT Disputes, TMT Competition, Regulatory and Compliance [email protected]
Consumer Credit Bill 2025: What We Know So Far
The long-anticipated Consumer Credit Bill 2025 (“Bill”) was finally tabled for first reading on 4 March 2025 in the Dewan Rakyat. The Bill is part of the government’s effort to enhance consumer protection in the credit sector, especially in light of the Buy Now, Pay Later (“BNPL”) boom.
While the fate of the Bill is still to be determined by the second reading that is scheduled to take place during the next June-August parliamentary session (and possibly further reading and debate after), we have had the opportunity to take a quick look at the draft Bill in its current form, and here is what we know so far.
1. Scope of the Consumer Credit Bill 2025
The Bill primarily seeks to regulate 2 types of businesses:
(i) Credit Business, which entails the following:
(ii) Credit Service Business, which entails the following:
2. Applicability of the Consumer Credit Bill 2025
The Bill will essentially apply to any person carrying on either credit business or credit service business in Malaysia, where the business offerings thereunder involve dealings with “credit consumer”.
“Credit consumer” refers to the following groups of people under the Bill:
The term “credit” is further defined under the Bill as any arrangement, agreement or facility which results in a person being in debt or incurring a financial obligation; or which allows the payment for goods or services sold to a person to be made in instalments.
In other words, the Bill will only be applicable to provider of credit business or credit service business in Malaysia who are dealing with the groups of credit consumers defined under the Bill. If you are operating credit business or credit service business but you are not engaging with any credit consumer, then the Bill is generally not applicable to you.
3. Supplementary to Existing Credit Related Laws
The Bill, once passed, will not repeal the other existing laws of Malaysia that also govern some of the credit businesses, such as the Hire-Purchase Act 1967, Consumer Protection Act 1999, Moneylenders Act 1972 and Pawnbrokers Act 1982.
In fact, credit business providers who are already regulated under existing laws in Malaysia will have to observe the additional obligations sought to be imposed under the Bill.
4. Licensing and Registration Requirements
If and when the Bill is passed, the providers of the following credit businesses and credit service businesses will have to either apply for a license or register themselves with the relevant authorities:
(i) Credit businesses:
(b) Leasing;
(c) Factoring;
(d) Islamic financing facility; and
(e) Islamic pawnbroking;
(ii) Credit service businesses:
(b) Impaired loan or financing acquisition; and
(c) Debt counselling and management.
Failure to obtain the requisite license or registration is a serious offence under the Bill and may attract fine up to RM5 million and/or imprisonment up to 5 years.
5. Minimum Financial Requirements
Any person intending to be a licensed or registered credit business provider or credit service business provider will have to fulfil certain minimum financial requirements pursuant to the Bill.
At this juncture, the type and amount of minimum financial requirements are still unspecified. It is however likely to come in the form of a minimum paid up capital.
6. Fit and Proper Requirements
A licensed credit provider and registered credit service provider may be required to observe certain fit and proper requirements in respect of its shareholder(s), director(s), partner(s) or senior management personnel(s).
At this stage, the extent of which the fit and proper requirements would apply is still uncertain, but it will likely include minimum criteria relating to:
(ii) Competency and capability; and
(iii) Financial integrity.
7. Change in Control Restrictions
The Bill also seeks to impose some form of change in control restrictions on the part of licensed credit providers and registered credit service providers.
Depending on the type of credit business or credit service business provided, a person can freely acquire interest in shares of a licensed credit provider or registered credit service provider up to 4.9% or 32.9%. Acquisition of shares beyond this level will require the prior written approval of the relevant authorities.
8. Further Conditions of Licensing and Registration
In granting a license or registration in accordance with the Bill, the relevant authorities may impose further conditions to be observed by the licensees or registrants.
At this juncture, it is still unclear what sort of additional licensing or registration conditions may be imposed. Taking cue from existing legislations that also govern credit businesses in Malaysia, we can potentially expect the regulators to introduce restrictions on maximum term charges, processing fees and late payment charges.
With the BNPL business gaining more tractions here in Malaysia, and with industry players looking to introduce other types of innovative consumer credit products and services, it is high time for the Malaysian government to finally introduce the Bill to regulate the consumer credit market. After all, when it comes to incurring of debts and liabilities, there should definitely be some form of protections afforded to consumers.
Along with the advancement of technology, those operating in the consumer credit market are also constantly looking to incorporate innovations in their business offerings, leveraging technology in offering their financial products or consumer credit products to the public. Credit providers and credit service providers are urged to pay close attention to the development of the Bill in Malaysia, as their business models will certainly be substantially impacted by the Bill once it is passed.
◦
The Technology Practice Group at Halim Hong & Quek frequently advises and represents companies in relation to financial technology or FinTech matters, including BNPL scheme, factoring service and earned wage access that utilise technology in their offerings. If you are interested to know more about the Consumer Credit Bill 2025 or if you need any legal assistance with regard to your FinTech business, please do not hesitate to reach out to the Technology Practice Group. Halim Hong & Quek has been awarded Fintech Law Firm of the Year in 2024 and ranked as Tier 3 in Fintech and financial services regulatory by Legal 500, Band 2 in Fintech by Chambers and Partners
About the authors
Lo Khai Yi
Partner
Co-Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”), Technology
Acquisition and Outsourcing, Telecommunication Licensing and
Acquisition, Cybersecurity
[email protected].
◦
Ong Johnson
Partner
Head of Technology Practice Group
Technology, Media & Telecommunications (“TMT”),
Fintech, TMT Disputes, TMT Competition, Regulatory
and Compliance
[email protected]
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