Zeti Akhtar Aziz: Launch of the Financial Mediation Bureau
Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the launch of the
Financial Mediation Bureau (FMB), Kuala Lumpur, 20 January 2005.
* * *
Bismillahirrahmanirrahim,
YB Tan Sri Dato' Seri Haidar bin Mohamed Noor,
Pengerusi, Biro Pengantaraan Kewangan
Dif-dif kehormat
Tuan-tuan dan Puan-puan hadirin sekalian
Assalamualaikum warahmatullah dan salam sejahtera
Our financial landscape is continuously being redefined. The objective is the development of a
financial system that best serves our nation. To achieve this, a comprehensive approach has been
adopted, addressing all the key elements and building blocks in the respective components of the
financial system so as to form a solid foundation on which an effective, efficient and resilient financial
system could be progressively built. An important component in the system that has not been
neglected has been the consumer protection framework. The requirements and expectations of
consumers are changing rapidly in tandem with increased education levels, growing wealth and
greater affluence. Consumers are becoming more discerning and demand better product choices,
more efficient delivery channels and more customer centric practices from financial institutions. These
trends have become important in reinforcing the more competitive environment in the financial
services sector.
Tuan-tuan dan puan-puan,
Antara komponen utama Pelan Induk Sektor Kewangan ialah usaha meningkatkan kesedaran dan
kefahaman pengguna tentang produk dan perkhidmatan kewangan, di samping mewujudkan
infrastruktur sokongan untuk melindungi pengguna, serta mengukuhkan rangka kerja kawalselia untuk
meningkatkan tahap ketelusan. Pelan Induk tersebut menggariskan beberapa inisiatif penting yang
bertujuan meningkatkan kuasa pengguna, di samping meningkatkan kefahaman mereka tentang hak,
dan tanggungjawab kewangan masing-masing. Ianya juga akan membolehkan pengguna membuat
keputusan yang bijak, demi kesejahteraan mereka. Usaha meningkatkan tahap celik kewangan di
kalangan pengguna sentiasa diberi keutamaan oleh Bank Negara Malaysia. Sejak tahun 1996,
beberapa inisiatif telah diperkenalkan untuk meningkatkan tahap celik kewangan, dan memupuk
kemahiran pengurusan kewangan yang baik di kalangan pelbagai kumpulan sasar.
Kesukaran pengguna mendapat akses kepada maklumat sering menyebabkan pengguna tidak
mendapat maklumat yang secukupnya bagi membolehkan mereka membuat keputusan yang bijak.
Pada tahun 2003, Bank Negara Malaysia dengan kerjasama institusi kewangan, telah melancarkan
satu rancangan 10 tahun Program Pendidikan Pengguna yang melibatkan sektor perbankan dan
insurans. Program tersebut bertujuan meningkatkan akses kepada maklumat oleh pengguna serta
meningkatkan kesedaran pengguna tentang hak dan tanggungjawab mereka. Ianya juga bertujuan
untuk memperdalamkan pengetahuan pengguna tentang konsep dan operasi perbankan Islam serta
produk dan perkhidmatan takaful yang ditawarkan oleh institusi kewangan. Dalam hal ini,
lamanlaman web InfoPerbankan dan InfoInsurans telah memainkan peranan penting dalam meningkatkan
kesedaran pengguna. Sehingga kini, laman web tersebut telah mendapat sambutan yang
menggalakkan dengan jumlah pelawat mencecah 17.6 juta. Di samping itu, lebih 4.2 juta naskhah
buku penerangan kecil telah diedarkan kepada pengguna. Peningkatan maklum balas yang kami
terima daripada pengguna mencerminkan tahap kesedaran pengguna.
Ladies and gentlemen,
In addition to the focus on financial literacy and awareness among consumers, considerable efforts
have also been made to strengthen the consumer protection infrastructure. These include specific
initiatives to strengthen the regulatory framework governing market practices by financial service
providers as well as enhanced minimum disclosure requirements and standards for credit card
issuers, and on fees and charges for financial products. At the same time, ongoing efforts to raise the
level of professionalism have also been intensified.
In 2004, the Bank introduced measures relating to sales practices in the insurance industry. Life
insurance agents are also required to adopt best advice practices in the sale of life insurance
products. To facilitate comparisons by consumers through enhanced disclosures, the Bank introduced
mandatory disclosures of commissions, fees and charges for insurance products with savings and
investment features that are sold through banking institutions. To ensure equitable treatment of
policyholders, the Bank further strengthened the regulations on claims settlement practices and
enhanced the controls over bonus reductions by life insurers to ensure reasonable returns to
participating policyholders.
More recently, the industry, together with the Ministry of Transport, implemented the e-cover notes
system, which will effectively eliminate forged motor insurance cover notes. This represents an
important development towards protecting the interests of both vehicle owners as well as road
accident victims. The Bank also expects to license financial advisers in 2005. Following the enactment
of the relevant legislation, financial advisers will be licensed and regulated by Bank Negara Malaysia
to provide professional advisory services on insurance to consumers in relation to their financial
planning needs. This development marks an important milestone in the ongoing evolution of the
overall consumer protection framework for the industry.
A number of initiatives have also been taken by the banking industry to maintain the integrity of the
payments systems and instruments, focused at promoting user confidence and ensuring that
consumers' interests are safeguarded. In combating card fraud, significant investments have been
made by the industry players to migrate all magnetic stripe ATM and credit card infrastructure to a
chip-enabled environment. New payment channels and infrastructures that leveraged on the Internet
have also been developed, aimed at increasing safety and efficiency in the financial system.
Measures have also been introduced to enhance customer service levels at financial institutions. For
this purpose, Bank Negara Malaysia has undertaken a nationwide survey to assess how well
consumers are being serviced by the financial service providers. The findings of the survey were
shared with the industry and individual institutions to serve as a basis for financial institutions to
assess their own performance and to use the results to benchmark themselves against global best
practices. The objective is to achieve world-class quality in financial services.
Ladies and gentlemen,
The provision of adequate avenues for redress is also important to enable consumers to resolve
conflicts through an equitable process. Efforts have been made to strengthen redress mechanisms
both at the institutional level as well as on an industry level. As you may be aware, avenues for
redress by consumers against banking institutions and insurers are already available via the Banking
Mediation Bureau (BMB), and the Insurance Mediation Bureau (IMB) respectively. These bureaus,
established more than a decade ago, have achieved considerable success in resolving disputes
against banks and insurance companies. In 2004, a total of 1,515 cases have been handled by these
two bureaus. Nevertheless, with the blurring of the traditional boundaries between financial products
and services provided by banks, insurance companies, and other financial intermediaries, the creation
of an integrated bureau is necessary for the resolution of a broad range of consumer issues raised in
relation to the diverse range of financial institutions under the supervision of Bank Negara. There are
also clear synergies to be achieved from leveraging on the resources available to enhance the
efficiency and effectiveness of the dispute resolution process as consumers will be provided with a
convenient and efficient one-stop centre to seek formal redress as an alternative to litigation, which
may involve considerable time and financial resources.
Ladies and gentlemen,
It therefore gives me great pleasure today to launch the Financial Mediation Bureau, an integrated
dispute resolution centre for financial institutions under the supervision of Bank Negara Malaysia. The
creation of an integrated agency is in line with the international trends towards such resolution centres,
and the framework and model for the Financial Mediation Bureau has been benchmarked against best
practices worldwide, notably in countries such as the United Kingdom, Canada and Australia.
The scope of the Financial Mediation Bureau has been expanded to cover, for the first time, Islamic
banks, takaful operators, development financial institutions, as well as selected payment system
operators and non-bank issuers of credit and charge cards. I am also pleased to announce that with
the launch of the Financial Mediation Bureau, the limit on cases falling within the jurisdiction of the
Bureau has been increased from the limits applicable to the former Mediation Bureaus. This will
provide increased access to the Bureau as an avenue for redress for a wider spectrum of the public.
Apart from the expanded coverage, the Financial Mediation Bureau plans to improve its nationwide
accessibility by progressively establishing 5 regional offices.
The Financial Mediation Bureau will be governed by a Board of Directors comprising nine members, of
whom five are independent directors, with the balance from the banking and insurance industries. Tan
Sri Dato' Seri Haidar bin Mohamed Noor, the first Chairman of the Board of the Financial Mediation
Bureau, has a long and distinguished career in the judicial service. I believe that the Financial
Mediation Bureau will benefit from his vast experience and expertise in judicial matters. The Financial
Mediation Bureau will be staffed by independent and experienced mediators who are experienced in
judicial matters. With the depth and diversity of experience represented on both the Board and staff of
Financial Mediation Bureau, I am confident that the new Bureau will be well placed to discharge its
responsibility in ensuring a fair and equitable resolution process for consumers.
The creation of this Bureau represents an important milestone in the enhancement of the consumer
protection infrastructure. Consumers are encouraged to make full use of the avenue available to seek
resolution of the issues faced by them.
Ladies and gentlemen,
I would like to take this opportunity to express our appreciation to the previous Board of Directors of
the Banking Mediation Bureau and Insurance Mediation Bureau for their contributions and dedication
in giving selflessly of their time and experience in the operation of the bureaus. I would also like to
acknowledge the contributions and support by the Association of Banks in Malaysia, Association of
Finance Companies in Malaysia, Association of Merchant Banks in Malaysia, Life Insurance
Association of Malaysia, Persatuan Insurans Am Malaysia, Association of Islamic Banking Institutions
Malaysia, Malaysian Takaful Association, Association of Development Finance institutions of Malaysia,
MBF Card Services (M) Sdn. Bhd., American Express and Diners Club (M) Sdn. Bhd. in making this
bureau a reality. They have agreed to fund the operational costs of this bureau through levies on
individual member companies in order that the services of the bureau can be provided free of charge
to members of the public. The strong and continuing support and commitment shown by the industry
will augur well for the success of the Financial Mediation Bureau.
Ladies and gentlemen,
In recent years, much progress has been achieved in developing and strengthening the financial
sector through policy initiatives in the areas of regulatory and supervisory frameworks, risk
management and corporate governance. These have been complemented with consumer protection
and education initiatives that promote more active consumerism to create a dynamic and responsive
financial system. Moving forward, Bank Negara Malaysia will continue to focus on the development of
the necessary infrastructure to ensure that consumers are given greater access to information on
financial products and services that will enable them to make well-informed choices and safeguard
consumer interests.
Among the measures that are being finalized for implementation is the issuance of guidelines to
ensure that the public has access to banking services at reasonable costs. Guidelines have been
issued to banking institutions to govern the imposition of fees and charges. With effect from
1 February 2005, banking institutions will also be required to provide 'basic banking services' to
Malaysians at minimal costs. The guideline specifies the minimum threshold of services and monthly
transactions that are to be offered without charges. The details of the services offered under this
guideline are being announced today. Over and above these financial services, as products and
services become more complex, financial institutions need to provide appropriate pricing that not only
reflect costs but also adequately reflect the cost saving that arises from investments undertaken. In an
increasingly competitive environment, efforts also need to continuously aim at enhancing efficiency
and cost effectiveness. This will not only bring benefits to the consumers and businesses but to the
overall economy.
Ladies and gentlemen,
One crucial element of the safety net for consumers is deposit insurance. Work in this area is at an
advanced stage and will be operational soon. The deposit insurance system will further strengthen
incentives for financial institutions to adopt sound financial and business practices and enhance public
confidence in the financial system by providing explicit protection on deposits. This represents an
additional enhancement to the consumer protection framework to promote confidence in, and the
soundness of the financial system.
Tuan-tuan dan puan-puan,
Pembangunan masyarakat pengguna yang berpengetahuan dan mampu menguruskan hal ehwal
kewangan peribadi masing-masing dengan baik memerlukan usaha dan kerjasama erat di antara
institusi kewangan, pengguna dan persatuan pengguna serta pengawal selia. Bank Negara Malaysia
akan mempastikan industri kewangan memainkan peranan secara aktif dalam usaha ini. Namun
demikian, proses ini wajar dipacu oleh institusi-institusi kewangan. Persatuan-persatuan pengguna
juga mempunyai peranan penting dalam memberi pendidikan dan penerangan kepada pengguna
tentang hak dan tanggungjawab mereka, termasuk saluran untuk pengguna mendapatkan
pem-bela-an. Walaupun inisiatif yang diambil akan meningkatkan perlindungan pengguna dan tahap
celik kewangan, pengguna juga perlu lebih bersikap proaktif untuk memahami hak dan
tanggungjawab mereka serta lebih berhemat dalam memilih produk dan perkhidmatan kewangan.
Pembangunan pengguna yang lebih berpengetahuan juga akan memberi cabaran kepada institusi
kewangan untuk mempercepatkan proses inovasi dan mempelbagaikan produk, perkhidmatan dan
saluran penghantaran yang ditawarkan. Ini akan merangsang pembangunan sektor kewangan yang
kukuh dan progresif, yang selanjutnya akan menyumbang kepada pertumbuhan ekonomi negara yang
mapan.
Dengan lafaz Bismillahirrahmanirrahim, saya dengan sukacitanya merasmikan pembukaan Biro
Pengantaraan Kewangan di Malaysia.
Terima kasih.