Empowering and Protecting Financial Consumers: Bank Negara Malaysia’s Consumer and Market Conduct Framework

Abstract

This case study looks back on Bank Negara Malaysia’s decade-long program to enhance consumer empowerment and market conduct and extracts key lessons. Following the Asian financial crisis of 1997, the government of Malaysia committed to a decade-long program of financial reform that aimed to improve financial stability through consumer protection and market conduct initiatives. The Financial Sector Master Plan (FSMP) was launched in 2001, and since then Bank Negara Malaysia has been working to align its business strategy and institutional capacity with the goals of the Plan. With financial stability as its primary objective, the Bank introduced initiatives that would help to strengthen the capacity of financial institutions, promote financial education among consumers, and ensure that financial institutions adhere to fair market practices. Today, consumer empowerment and protection are pursued through a comprehensive framework that includes market conduct regulation and supervision, avenues for redress, consumer literacy and public awareness initiatives. This framework has been built progressively over time and has benefited from collaborations with other departments in Bank Negara Malaysia, consumer associations, and the industry. Since 2006, the Bank’s Consumer and Market Conduct Department (CMC) has played a key role in developing the framework.