Zeti Akhtar Aziz: Launch of the consumer education programme
Opening remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the launch of
the consumer education programme at the Central Bank of Malaysia, 30 January 2003.
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Ladies and Gentlemen,
The consumer education programme being launched today is a further development that represents
an important step forward in the modernisation of our financial system. We have already seen the
significant progress that has been achieved by the banking sector in the restructuring and reform
process, in the capacity enhancement of the banking institutions and in the overall development of our
financial infrastructure.
The ultimate objective of this progress is to contribute towards enhancing the growth and development
prospects of our nation. The strengthening of the banking sector needs to be translated into enhanced
effectiveness and efficiency of the banking institutions in meeting the changing requirements of our
economy. How consumers can expect to benefit from this progress will depend on how well informed
they are on matters relating to financial services being provided.
The consumer education programme being launched today represents an important element in the
overall strategy of enhancing the consumer protection infrastructure. Consumer education and
awareness is essential in an environment that is becoming increasingly more complex and
sophisticated. As outlined in the Financial Sector Master Plan, the strategies to achieve an adequate
and effective consumer protection infrastructure involves:
• A comprehensive and structured consumer education programme;
• Increased transparency by the financial institutions on the products and services being
offered;
• Legal redress for consumers to deal with grievances arising from the purchase of financial
products and services;
• Expansion in the role of the Banking Mediation Bureau to cover the full range of retail
banking related consumer complaints and educating banking consumers of the ways in
dealing with the available courses of action;
• The implementation of Anti-Trust regulation to define the process by which abuses that are
detrimental to consumers can be addressed; and finally
• Establishing a deposit insurance fund to not only create incentives for prudent management
by the banking institutions but also to assure protection to small depositors. The objective is
to promote a more market oriented consumer protection framework.
Ladies and Gentlemen,
This new millennium brings with it new opportunities and challenges to both the financial institutions
and to the consumers. As we advance forward we can expect an increasing array of choices open to
consumers.
In making financial decisions, consumers require information on a wide range of matters and details
about the processes and documentation involved, the relevant fees and charges to be incurred and
the risks and benefits of each type of product or service. The aim of the setting-up of a one-stop
consumer education centre is to address information gaps that may exist. The programme also aims
to broaden the consumers' horizon by enhancing their knowledge on the new and more innovative
ways of conducting banking. Internet banking, for example, is a fast and convenient mode of
conducting banking transactions that has yet to gain widespread acceptance amongst banking
consumers. With greater access to information on this, consumers can be better informed on the
advantages of this form of banking. Any fears or apprehension on this mode of banking may be
removed thus allowing for greater convenience derived from banking via desktops in the comfort of the
home or office.
Increased access by the public to information will also increase the level of awareness not only of the
rights of consumers but also on the responsibilities of both the consumers and financial institutions
with regard to the financial products and services being offered. Consumers should be aware of their
rights and how best to seek redress if there is dissatisfaction with the products or services purchased.
Through active consumerism, banking products and services will need to keep up with the
expectations of consumers and this will inherently contribute towards improved banking products and
services.
As consumers become more aware of the financial product characteristics and the choices of financial
providers, they will be in a better position to demand for a broader range for products and services
customized to their requirements, at more competitive prices and through more convenient channels.
This will contribute to the development of the financial sector as it will prompt increased innovation in
response to these demands. Indeed, product life cycles can be expected to shorten in the retail
financial services. For example, checking accounts are being fast being replaced by cash
management accounts.
Well informed and discerning consumers are a powerful force in shaping and driving the market.
Banking institutions will thus have to continually innovate in order to meet consumers' preferences and
expectations. Consumers' demand will thus be able to drive business competitiveness, spur greater
innovation and challenge banking institutions to strengthen their competitive advantage. Educated
consumers are without doubt, a powerful force to drive performance improvements in banking
institutions to attain the desired efficiency and effectiveness in a market driven environment.
Financially savvy consumers will demand greater clarity and transparency in the way banking products
and services are provided to customers. Communication policies by banking institutions therefore
needs to ensure clear and effective communication of key information to customers, especially with
regard to the more complex products. Indeed, increasingly knowledgeable customers would not only
allow for good financial decisions, but there would also be pressure for banking personnel to not only
enhance their own knowledge but also their customer service orientation.
Ladies and Gentlemen,
Currently, consumers are not fully aware of the avenues for redress when they have complaints on the
financial services being produced. In a survey undertaken by the consumer associations indicate that
the level of awareness of the existence of the Banking Mediation Bureau was very low. The consumer
education programme seeks to provide consumers with information on the avenues available to them
if they have issues relating to the financial services or products they have acquired. Banking
institutions are required to have a special unit to deal with complaints. Where this cannot be resolved,
it can be referred to the Banking Mediation Bureau. In addition to the Banking Mediation Bureau, there
is also the Unit in Bank Negara Malaysia. With the infrastructure in place, banking customers therefore
have a number of channels to address grievances in a consultative and constructive manner.
Ladies and Gentlemen,
The existence of a single point of reference on retail banking products and services is expected to
provide consumers with a fast and convenient way of looking for information and accelerate their
learning curve. It is hoped that this one stop centre will improve financial literacy amongst the
Malaysian banking population and create a more financially savvy population. This has prompted the
development of a long term programme to promote consumer education in Malaysia. The primary
objective of the programme is to raise the level of financial literacy among the Malaysian public. The
programme hopes to develop banking customers who will make better informed financial decisions
and be confident in exercising their rights.
To facilitate recognition of the programme by the public, the consumer education programme has been
given an identity and logo of its own. The programme is known as "BankingInfo" and will be
implemented in phases and in a structured and incremental manner. Each phase of "Bankinginfo" will
reach out to certain target groups to ultimately achieve its long-term goal of reaching out to all
segments of the banking population. Consumers are not homogenous and the information to be
transmitted will have to take into account the different needs and preferences. The level of awareness
of this programme will be monitored with a view of improving the content and enhancing the mode of
dissemination and communication of the information.
In this first phase of the programme, the information will be disseminated to the public in the form of 12
information booklets and via the BankingInfo web-site. The areas covered include information on
consumer banking products, information on new and innovative banking channels as well as
educational information on aspects of banking and currency. It also includes information on Islamic
banking, the Credit Bureau and the Malaysian currency and on Bank Negara Malaysia. All these
booklets can be obtained from branches of the commercial banks and finance companies and can be
accessed from the BankingInfo website.
Ladies and Gentlemen,
Today is just the first step forward in the consumer education programme. BankingInfo is a 10-year
programme, and over time, the plan is to cover a greater range of banking products and services.
Consumer associations can contribute to this process. Consumer associations play an important role
in disseminating and educating consumers on their rights and responsibilities. Through your direct
contact with consumers, you can in the education process encourage reference to the one-stop
information center established for this purpose and highlighting the importance and benefits of
becoming financially literate. The wide network and access to consumers, the consumer associations
also represent an important source of reference to improve the programme. Through this process, I
am sure that the programme will become an important and beneficial source of information on banking
matters for consumers.
As part of the consumer protection infrastructure, it is also planned that the scope of issues which can
be mediated by the Banking Mediation Bureau be expanded. The guidelines on minimum standards
on product disclosure, including prescribing and adopting standard terms and definitions are now
being reviewed. These initiatives will ensure avenues to seek redress at reasonable costs be further
strengthened while transparency in the financial marketplace will be improved.
The Banking Mediation Bureau (BMB), was established almost eight years ago. It is timely that a
review is carried out in terms of its role as well as the scope of its activities. Currently under review is
the proposal to merge the mediation bureau for the banking sector with its insurance counterpart to
create a new entity that would not only handle issues on banking but also on insurance services being
offered as well as by other institutions under the supervision of BNM. These include the Islamic banks,
takaful companies and development financial institutions.
Another initiative is the development of a framework to increase product-specific and institutional
transparency, with the view to move towards full disclosure at a later stage. The initiative to improve
transparency for all retail financial products aims to ensure that consumers receive sufficient and
relevant information they can use to make informed decisions on financial products. In a move to
make Islamic banking products more easily distinguishable and better understood, the letter 'i' has
been suffixed to the generic names of Islamic banking products. In addition, the generic names have
been standardised to enable customers to easily recognise the type of Islamic banking products. This
measure will be progressively implemented by banking institutions offering Islamic banking products
and services and will seek to enhance the level of awareness of Islamic banking products.
Transparency in retail financial products emphasizes disclosing accurately and fairly the price and
terms of a financial product as well as the timeliness of the receipt of information by consumers. A
guideline to standardise disclosures of retail financial products for the Malaysian banking industry and
standard definitions and terminology will also be introduced.