Malaysia’s Landmark Consumer Credit Act 2025 Enacted – Critical Business Impacts & Compliance Requirements
May May Chan
Chief Executive Officer
of ZICO Insource
Malaysia’s Landmark Consumer Credit Act 2025 Enacted – Critical Business Impacts & Compliance Requirements
May May Chan
Chief Executive Officer
of ZICO Insource
The Malaysian Parliament has passed the Consumer Credit Bill 2025, a pivotal piece of legislation that ushers in a comprehensive, unified regulatory framework for the non-bank consumer credit industry. The Bill, which awaits Royal Assent to become the Consumer Credit Act 2025 (“CCA 2025”), is scheduled to be enacted in the first quarter of 2026, fundamentally reshaping the operational landscape for credit providers.
The CCA 2025 introduces stringent compliance requirements aimed at protecting “Credit Consumers”, defined to include individuals seeking credit for personal use as well as micro and small enterprises (MSEs), through mandated fair treatment, transparency, and effective redress mechanisms.
Establishment of the Consumer Credit Commission (CCC)
The cornerstone of the legislation is the establishment of the Consumer Credit Commission (CCC), an independent statutory body that will serve as the sole regulator for non-bank credit providers in phases. The CCC is tasked with overseeing market conduct, licensing, and enforcement, and will advise the Minister of Finance on national policy involving consumer credit.
Mandatory Licensing and Registration Regime
Legal service providers must immediately advise their clients on the new compliance obligations. The Act mandates that entities conducting specific credit activities must secure the appropriate licence or registration from the CCC (or the registrar of Islamic credit providers to be appointed under the Act, where applicable).
Activities Requiring a License (Section 40 & Schedule 4):
- Buy now pay later (BNPL) schemes (including Islamic variants)
- Leasing (including Islamic variants)
- Factoring (including Islamic variants)
- Islamic financing facility
- Islamic pawnbroking
Activities Requiring Registration (Section 57 & Schedule 4):
- Debt collection services
- Impaired loan or financing acquisition
- Debt counselling and management services
Critical Impacts on Business Operations
The CCA 2025 will have immediate and significant operational impacts beyond simple licensing:
- Responsible Lending Obligations:Providers must implement robust, standardized affordability assessments before extending credit, shifting liability for irresponsible lending practices onto the provider.
- “Fit and Proper” Requirements:Key management and directors of credit businesses will be subject to stringent vetting by the CCC to ensure integrity and competence.
- Transparency Requirements:Businesses must ensure clear disclosure of all terms, including the effective interest rates and hidden fees, preventing misleading advertising.
- Operational Overhaul:Internal processes, IT systems, and governance frameworks will require updating to comply with the CCC’s standards for consumer data protection, ethical conduct, and dispute resolution.
Severe Penalties for Non-Compliance
Non-adherence to the licensing and registration mandates once the Act is operational will constitute a severe criminal offence. Conviction carries substantial penalties such as a fine not exceeding five million ringgit (RM5,000,000), imprisonment for up to five years, or both.
Action Items and Timeline
The Act will be implemented in three distinct phases, with Phase 1 beginning upon enforcement in early 2026 and focusing on currently unregulated providers (e.g., BNPL).
For detailed legislative review, the official text of the Bill is accessible via the Parliament of Malaysia website by searching for the code D.R.14/2025. (click here) Further implementation guidance is available from the CCOB Task Force website. Non-bank credit providers should proactively review their business models and ensure robust consumer protection policies are in place to meet the imminent compliance requirements.
How may we assist you?
ZICO Insource will provide you with practical operational solutions together with strategic insights to help your business navigate the CCA 2025.
- Regulatory Compliance Assistance: Our team will guide your operations so that it may meet all the requirements of the CCA 2025, helping your business to be compliant with the CCA 2025.
- Reviewing the Contract and the Product: We would provide thorough reviews of contracts and products.
- Consumer Credit Commission Support: ZICO Insource can assist you in responding to the CCC.
Contact us to find out more.
Disclaimer: This article does not constitute legal advice or substitute for professional advice. Should you need legal advice or professional advice, please contact a lawyer or a professional for the advice that you are seeking.
