in mitigating risks. this includes putting in place a conducive regulatory environment in terms of the laws and regulations that protect consumers and undertaking surveillance and supervision to ensure the responsible behaviour by financial institutions. the international community is giving greater attention to consumer protection issues given the potential for high charges for such financial services and for borrowers to become over - indebted. while most countries have leveraged on the existing legal or regulatory frameworks developed for consumer protection in general, there is a need to recognise the limitations of such general frameworks in addressing consumer protection in the context of promoting a more inclusive financial system. a consumer protection regime that relies on full disclosures may mean very little to consumers that have neither the capacity to understand the disclosures, nor the ability to exercise the appropriate choice between the products being offered. existing consumer protection frameworks may need to be adapted to address the specific needs of the more vulnerable groups. finally, the development of a financial education programme is vital to enhance financial capability for consumers to participate effectively in the financial system that is dynamic and fast evolving. we are now in an environment that is seeing the proliferation of financial products and services and the emergence of electronic finance. greater financial literacy will also ensure that the financial industry will be responsive to the more discerning demands. being ill equipped or having a lack of understanding of the nature of the products could increase vulnerability to misselling by financial institutions or to fraud and scams. proficiency in financial knowledge will contribute towards greater empowerment and competent financial decisions. studies have shown that financial education that is made available at an early age, in the school education system, will strengthen this potential and enhance the greater financial inclusion. in malaysia, the commitment to the financial inclusion agenda is legislated under the new central bank of malaysia act 2009 which provides as one of our primary functions – to promote the development of a sound, progressive and inclusive financial system. malaysia ’ s financial inclusion agenda has been developed in concert with the development of the overall financial sector and encompasses the five broad strategies. our blueprint for the development of the financial sector for the next decade will give special focus on financial inclusion and consumer protection. in the previous decade, the focus was bis central bankers ’ speeches to enhance the access to financing, financial education and putting in place the supporting institutional arrangements to enhance financial inclusion. while these efforts will be intensified further in this next decade, greater leverage will be made on technology and on new institutional arrangements to extend the outreach to the

financial system suggest that much more needs to be done, both at the national and international level. barriers to financial inclusion continue to exist in many countries. these barriers include problems that relate not only to the physical access to financial services but also the high costs of the services and conditions that deter such access that result in disengagement in using financial services. policymakers can contribute in five significant areas in advancing the financial inclusion agenda. the first is to give clarity to the financial inclusion agenda, in addition to driving the national commitment to financial inclusion. this includes defining the goals for financial inclusion that needs to be broad based and comprehensive. universal access to basic financial services is desirable, but this needs to be differentiated according to the different segments within the economy. at one end of the spectrum, this may include those households and micro enterprises that will benefit from being brought into the economic mainstream while at the other end of the spectrum are those households and small and bis central bankers ’ speeches medium scale enterprises that are already in the economic mainstream but are disadvantaged because they are not able to participate effectively in the financial system. the goal should also be to achieve sustainable financial inclusion outcomes. secondly, policymakers have an important role in creating the right incentives and competitive environment for financial institutions to respond to the opportunities in financial inclusion. interventions by the government should not result in market distortions. as part of the regulatory regime is, however, the promotion of responsible behaviours to ensure access to financial services will be fair and at cost effective pricing. achieving the appropriate balance between these objectives can often be challenging, and different countries have approached this in different ways, with varying degrees of success. intervention needs to be consistent with competitiveness, stability and sustainability of the financial system. the third role for policymakers is to provide the enabling infrastructure that includes the mechanisms, systems, technology and institutional arrangements that will enhance the access to financial services. while technological advances have transformed the banking industry from a traditional “ bricks - and - mortar ” infrastructure to a system supplemented by electronic channels, the potential for greater use of technology to promote wider access to financial services still remains largely untapped. while mobile phone banking has been successful in enhancing outreach, the further use of it can substantially reduce the costs of extending the outreach of financial services. the other infrastructure that is important to support financial inclusion is having in place a sound payment and credit information system. the fourth is to evolve a comprehensive approach to consumer protection as an important complementary role to prudential regulation