The Financial Services Act 2013 (FSA), Islamic Financial Services Act 2013 (IFSA) and the Development Financial Institutions Act 2002 (DFIA) prohibit financial service providers (FSPs) from engaging in conduct which is deemed to be inherently unfair to financial consumers. Such prohibited business conduct is set out in Schedule 7 of the FSA and IFSA and the Second Schedule of the DFIA.
The list of prohibited business conduct under the Acts complements and reinforces existing standards on business conduct and consumer protection issued by Bank Negara Malaysia (the Bank), and serves to:
(a) ensure that financial consumers are not provided with misleading or deceptive information in connection with a financial service or product;
(b) prevent unreasonable business practices that intimidate or exploit financial consumers;
(c) prevent business practices that restrict the freedom of financial consumers to choose between financial services or products available to them; and
(d) prevent collusive business practices that may result in unfavourable outcomes to financial consumers.
Guidance relating to prohibited business conduct set out in paragraphs 5 and 6 of Schedule 7 of the FSA and IFSA, and paragraphs 5 and 6 of the Second Schedule of the DFIA are issued in consultation with the Malaysia Competition Commission.
The policy document is issued to provide guidance on descriptions of prohibited business conduct as set out in Schedule 7 of the FSA and IFSA and the Second Schedule of the DFIA, and the factors that the Bank will consider in determining whether an FSP has engaged in prohibited business conduct.
The document does not aim to provide a definitive response to any particular conduct, but serves as a guide on when a conduct may be regarded as a prohibited business conduct as set out in Schedule 7 of the FSA or IFSA or the Second Schedule of the DFIA. The final determination of whether any particular conduct is prohibited will require consideration of the specific facts of each case.
This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking
