Interest rate on credit sales to be capped at 15pc

 |Nov 3, 2017

KUALA LUMPUR: The maximum fixed interest rate of 15 per cent per annum that can be imposed by companies providing credit facilities will be enforced on Jan 1, 2018, the Dewan Rakyat was told yesterday.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hamzah Zainudin said this followed the adoption of the Consumer Protection (Credit Sale) Regulations 2017, passed by the Dewan Rakyat and Dewan Negara in April to address the problem of high interest rates charged on credit sale transactions.

“Companies providing credit facilities can no longer charge interest rates of more than 15 per cent per annum.

“The interest rate cut is expected to help people, especially the less fortunate, to own goods for themselves and their family,” he said when responding to a question from Hasbullah Osman (BN-Gerik).

Hamzah said following several consultations with the industry held early this year, it was found that the interest rate charged could reach as high as 35 per cent per annum.

He said those who violated the new legislation, if convicted, would be fined not exceeding RM100,000 for a corporate body, while non-corporate bodies would face a maximum fine of RM50,000 or imprisonment not exceeding three years.

At the same time, the ministry will implement an advocacy programme for consumers and industries to enhance understanding of their rights and obligations before, during and after entering into a credit sales transaction agreement, he said.

To a supplementary question from Hasbullah on the different rates for late charges imposed by credit card issuers, Hamzah said it would be standardised to only 5 per cent per annum in accordance with the Consumer Protection (Credit Sales) Regulations 2017.

“The late payment rates are so confusing as each (credit card issuer) has its own way, while the percentage charged is rather high,” he said. – Bernama