Bank Negara Malaysia (“BNM”) took a significant step towards enhancing protections to vulnerable consumers with the issuance of the Fair Treatment of Financial Consumers policy document (“2024 Policy Document”) on 27th March 2024. This directive, which immediately came into force with certain provisions scheduled for implementation by 1st April 2025, supersedes the 2019 Policy Document of the same name (“2019 Policy Document”). Targeting financial service providers (“FSPs”) across Malaysia, including licensed banks, insurers, and financial advisers, the 2024 Policy Document introduces key enhancements aimed at safeguarding vulnerable consumers in the following manner:-

a. Inclusion of definitions of vulnerable consumers and persons with disabilities

The 2024 Policy document sets out the definition of a vulnerable consumer to mean a consumer who may face challenges in accessing financial services due to various factors such as disabilities, age and financial instability. Whereas persons with disabilities include those who have long term physical, mental, intellectual or sensory impairments which in interaction with various barriers may hinder their full and effective participation in society.

b. Inclusion of Outcome 7 under Paragraph 8.1 of the 2024 Policy Document

The 2019 Policy Document has set out that FSPs shall implement the requirements with the objective of delivering specified outcomes such as increasing consumer confidence and leaving unfair discriminatory practices. The addition of Outcome 7 under Paragraph 8.1 of the 2024 Policy Document entails that FSPs are to ensure that vulnerable consumers  are treated fairly and equitably by the FSP and its staff, representatives, and agents. Further to the above, under Paragraphs 16.1 to 16.28, new requirements on the fair treatment of vulnerable consumers have been included in which FSPs are to adhere to the following:-

1. to assess the needs of vulnerable consumers in its existing financial consumer base and target market, as well as implement appropriate policies and procedures to meet these needs;
2. to take into consideration any prevailing or possible vulnerabilities in its existing financial consumer base as well as the needs of vulnerable consumers in FSPs’ target market during the product design stage; and
3. to consider the likelihood of any inherent product features that may pose material risks to vulnerable consumers when developing financial services and products, as well as to provide adequate safeguards to prevent or minimise such risks when offering financial services and products to vulnerable consumers.

c. Good practices in relation to the treatment of vulnerable consumers under Appendix 5 of the 2024 Policy Document

The 2024 Policy Document provides for specific new good practices by FSPs in dealing with persons with disabilities and other vulnerable consumers under Appendix 5. These good practices include that:-

1. FSPs offer a full range of financial services and products to persons with disabilities on an equal basis with other financial consumers;
2. statements and notifications sent via email by FSPs to vulnerable consumers are in formats that persons with disabilities can access;
3. FSPs provide seamless and convenient deposit account opening processes for persons with disabilities; and
4. FSPs ensure staff, representatives and agents are always ready to provide the necessary assistance (such as reading terms and conditions, or completing forms, bank slips, cheques).

The 2024 Policy Document is a welcome effort to enhance the standards of responsible and professional conduct in FSPs to ensure much needed protection to vulnerable consumers. The introduction of the new and improved guidelines which specifically take into consideration these often-neglected individuals would ensure that FSPs exercise due care, skill and diligence, and act fairly in their dealings with vulnerable consumers.

Zain & Co. acknowledges Associate, Muhammad Aiman Sabeh Mohd Shahib and Pupil-in-Chambers, Nurhanissa Nylia Zed Zariman for their contributions to this article. For further information or any related inquiries, please contact our Partner, Zainal Azlan Abdul Kadir.