A look back: The front cover of ‘The Star’ March 10 issue
KUALA LUMPUR: Buy-now-pay-later (BNPL) credit service providers have the freedom to set any affordability assessment model as long as it aligns with the proposed set of standards.
Bank Negara Malaysia assistant governor Abu Hassan Alshari Yahaya said several mechanisms have been discussed with the service providers to better regulate BNPL schemes under the Consumer Credit Bill 2025.
“Under the proposed law, all BNPL service providers must be licensed and in order to get one, they must fulfil several requirements set by the advisory committee.
“These include the affordability assessment models by the service providers to ensure their users could afford repayments,” he said.
Abu Hassan, who is also the Consumers Credit Oversight Body Task Force head, said the service providers need to also prove that they can operate their schemes in a proper manner.
However, he said the mechanisms for BNPL regulations are still underway and providers are encouraged to make their propositions.
He also highlighted several concerns by the service providers such as how to make the affordability assessment easier as it would need to consider data on incomes of the borrowers.
“We would allow them to evaluate the users’ income, potentially through acquiring the borrower’s EPF or tax returns.
“Obviously, this would make the whole process slower. So the proposed Act would see how a flexible approach can be adopted,” he said.
Abu Hassan pointed out that one of the ways that could be considered by the service providers was to allow self-declaration income.
He also did not dismiss proposals to use alternative data, other than income data, such as using artificial intelligence to assess the affordability of users.
“We don’t stifle innovation. Instead, we would allow the model to be used by these service providers.
“When they give out credit to borrowers, they must make sure the users can do repayments,” he said, adding that they aimed for a win-win mechanism to benefit both industry players and consumers.
The Bill was tabled in the Dewan Rakyat for the first reading on March 4, set to be read the second and third time in the next meeting on June 23 to July 31.
Abu Hassan said Bank Negara also aimed for the Bill to receive royal assent and gazetted by the fourth quarter of the year.
The implementation of the proposed Act is divided into three phases.
Among the provisions is the establishment of a Consumer Credit Commission (CCC) as the new authority regulating non-bank credit providers and credit service providers in the country.
