Regulatory Reform to Strengthen Islamic Consumer Credit Business in Non-Banking Sector:

The Case of Malaysia

Ibtisam @ Ilyana Ilias

 

Abstract: This note examines the transformative regulatory reform that aims to fortify the Islamic consumer credit landscape among non-bank entities in Malaysia. It commences with a brief background that led to this reform and proceeds with an explanation of the primary changes involved, namely the adoption of a comprehensive Consumer Credit Act and the establishment of the Consumer Credit Oversight Board Taskforce, which represent significant milestones in addressing the fragmented regulatory framework, ensuring Shari’ah compliance and elevating consumer protection within Islamic consumer credit sphere. The reform resonates with the principles of maslahah (public interest) and maqasid al-Shari’ah (objective of Shari’ah), hisbah (accountability) and other consumer protection principles embedded in the Qur’an and Sunnah. Through a phased implementation approach and strategic collaboration among regulatory bodies, this reform is expected to benefit the core stakeholders, namely the consumers, while nurturing sustainable growth in the broader consumer credit ecosystem.