Abstract
This paper examines the status of the legal and regulatory framework for consumer protection in Malaysia, an emerging economy. Using leximetrics and notions of incomplete law, the paper explores the financial consumer protection regime in the country by examining two aspects of the legal framework: the legal infrastructure and typology of laws. The Malaysian legal framework for financial consumer protection is assessed in light of the good practices identified in international guidelines issued on the themes by OECD and the World Bank. The results highlight the complementary nature and different roles that laws, regulations, and supporting institutions play in achieving a comprehensive financial consumer protection framework in the country.
Highlights
Legislative Empowerment and Supervisory FrameworkThere is a need for a legal and regulatory framework for instituting an environment for protecting financial consumers
Since the lack of safeguards to protect consumers were among the weaknesses in the global financial crisis (GFC) of 2007-7009, there has been renewed interest in establishing a robust regime to enhance financial consumer protection
After outlining the key features of international financial consumer protection (FCP) guidelines developed by the OECD (2011) and World Bank (2012), the paper assesses the legal framework of Malaysia that governs FCP in light of international guidelines
Summary
There is a need for a legal and regulatory framework for instituting an environment for protecting financial consumers This would entail specific laws and regulations related to consumer protection that applies to organizations supplying different financial services. WB 2012 identifies legal institutions for consumer protection as the first item in its good practices and OECD 2011 requires that FCP should be an integral part of a country’s legal, regulatory and supervisory framework. WB 2012 identifies the establishment of specific prudential supervisory bodies for consumer protection as a key component of good practices This would require setting up institutions that enforce the protection of consumers, having a regulatory oversight body responsible for ensuring that the laws and regulations are applied, and requiring institutions to redress any violations. While some countries may have an oversight body that is a part of an existing regulatory institution, it must have a clear mandate with a separate reporting structure to maintain credibility and to avoid conflicts of interest (Rutledge, 2010: p. 18)
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