With the explosive growth of buy-now-pay later (“BNPL”) schemes and alternative financing models, Malaysia’s credit consumer landscape has long been marked by fragmented regulation. The passing of the Consumer Credit Bill 2025 (“CCB 2025”) by the Dewan Rakyat on 21 July 2025 signals a pivotal step toward creating a unified regulatory framework – offering both oversight and consumer protection in one consolidated law.

This article highlights what non-bank credit providers and credit service providers need to know about the CCB 2025, including licensing requirements, compliance obligations, enforcement mechanisms and timelines.

1. Establishment of the Consumer Credit Commission

The cornerstone of the CCB 2025 is the creation of the Consumer Credit Commission (“Commission”), a statutory body tasked with overseeing the licensing, registration, and supervision of credit businesses and credit service providers. The Commission will also serve as a policy advisor to the government on all matters relating to consumer credit.

2. Licensing and Registration Framework

The CCB 2025 introduces a structured regime requiring licensing for credit businesses and registration for credit service businesses.

Under the CCB 2025, any person who intends to carry out the following types of credit business is required to obtain a licence from the Commission:

(a) BNPL scheme;
(b) Leasing;
(c) Factoring;
(d) Islamic BNPL scheme;
(e) Islamic leasing; and
(f) Islamic factoring.

Certain activities, such as Islamic financing facility or Islamic pawnbroking, require licensing from the registrar of Islamic credit providers (“Registrar”).

On the other hand, registration by the Commission is required in order to carry out the following credit service business:

(a) Debt collection;
(b) Impaired loan or financing acquisition; and
(c) Debt counselling and management.

There are certain requirements to be fulfilled by the applicants for licensing or registration such as the minimum financial requirements and compliance with any regulations, standards or guidelines or other requirements relating to licensing or conditions, as may be specified by the Commission or the Registrar.

3. Who is a ‘Credit Consumer’?

The CCB 2025 defines a ‘credit consumer’ as:

(a) an individual who obtains, has obtained or intends to obtain credit for personal, domestic, or household purposes;
(b) a micro or small enterprise obtains, has obtained or intends to obtain credit not exceeding RM300,000;
(c) any other person or category of persons specified by the Commission; or
(d) a social guarantor providing non-commercial guarantees for the above.

4. Phased Implementation Timeline

The CCB 2025 will be rolled out in three distinct phases:

(a) Phase 1 (upon enforcement to 2027): the Commission will regulate previously unregulated credit providers (e.g. BNPL) while existing ministries and government agencies will retain oversight of the businesses within their respective sectors.

(b) Phase 2 (2028-2030): the Commission expands to absorb regulatory functions from Ministry of Housing and Local Government and the Ministry of Domestic Trade and Cost of Living.

(c) Phase 3 (2031 onwards): the Commission becomes the sole regulatory body for all consumer credit activity, subject to a government review.

5. Conduct Requirements & Consumer Protection

The CCB 2025 imposes strict behavioural standards. Licensed credit business providers and registered credit service providers must continue to comply with the minimum financial requirements and ensure that their controllers, directors or senior management satisfy fit and proper requirements, as may be specified by the Commission or the Registrar.

Further, licensed credit business providers and registered credit service providers are under a duty to carry on their businesses in a fair, responsible and professional manner when dealing with credit consumers.

Licensed credit business providers and registered credit service providers are prohibited from certain business conduct, including:

(a) engaging in misleading or deceptive conduct;
(b) inducing or attempting to induce a credit consumer through an advertisement;
(c) exerting undue pressure, influence or using harassment, coercion pr physical force in relation to the offer of any credit product or services or the payment for such credit product or services; or
(d) demanding payments from a credit consumer in any manner for unsolicited credit product or services.

Additionally, providers must conduct affordability assessments before extending or increasing credit and offer repayment relief mechanisms for consumers facing hardship due to illness, job loss, or natural disasters.

6. Enforcement Powers & Penalties

The Commission is vested with significant enforcement powers. Non-compliance with the CCB 2025 may result in the credit business providers and/or the credit service providers being subject to potential liabilities such as criminal penalties of up to RM5 million in fines and/or 5 years imprisonment, civil remedies such as compensation, injunctions and rectification orders or administrative actions comprising inspections, audits, suspension or revocation of licences.

These measures aim to deter predatory lending and ensure compliance throughout the ecosystem.

7. Regulatory and Supervisory Authority (“RSA”)

The CCB 2025 further introduces the concept of RSA which comprises (a) the Commission; (b) the Central Bank of Malaysia; (c) the Securities Commission Malaysia; (d) the Ministry of Domestic Trade and Cost of Living; (e) the Ministry of Housing and Local Government; and (f) the Malaysia Co-operative Societies Commission. Each RSA regulates its respective sector in accordance with the relevant legislation.

The functions and powers of the RSA under the CCB 2025 are in addition to the functions and powers of the RSA under other relevant written laws.

Conclusion

The CCB 2025 represents a watershed moment in Malaysia’s credit regulatory landscape. While the enforcement date depends on gazettement and subsequent implementation phases, non-bank credit providers and credit service providers should act now to review existing business models, assess licensing or registration obligations, implement robust consumer protection policies and prepare for data reporting and compliance audits.

With stricter oversight, greater transparency, and unified standards, the CCB 2025 aims to elevate trust and fairness in Malaysia’s consumer credit ecosystem while offering long-overdue protection to vulnerable borrowers.

This article is authored by our Partner, Ms Hoong Wei En and Associate, Ms Lim Jia Wen (Trisha). The information in this article is intended only to provide general information and does not constitute any legal opinion or professional advice.

Written by:

HOONG WEI EN
Partner
[email protected]

LIM JIA WEN (TRISHA)
Associate
[email protected]

LegalTaps September 2025

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