FOMCA fully supports Bank Negara Malaysia’s concern that that is lack of financial literacy amongst Malaysian consumers.
More than 290,000 consumers have been declared bankrupt with more than 70% of them below the age of 45. Indeed data from various sources indicate clearly that many Malaysians are not managing their finances optimally. Bank Negara would suggest four reasons why Malaysians get into financial difficulties. The reasons are low financial resilience and thus vulnerable to financial shocks, tendency for instant gratification, no long term financial planning and lack of understanding of risks and returns making consumers vulnerable to scams and fraud.
Secondly the number of scams in Malaysia are increasing substantially. According to the Inspector-General of Police, there have been a total of 12,092 online scams between January and July 2022 with loses amounting to RM 414.8 million. Several agencies including the Police, Bank Negara Malaysia and the Securities Commission have been taking various measures to strengthen safeguards against financial frauds and scams. However, the number of scams keep increasing.
The missing link towards strengthening financial resilience and responsible financial management could be the financial empowerment of consumers.
While in Malaysia we have the National Strategy for Financial Literacy 2019-2023 whose primary objective is to elevate financial literacy of Malaysians and promote responsible financial behaviour of consumers. The National Strategy is expected to be achieved through the Financial Education Network, an inter-agency platform committed to promoting financial literacy among Malaysians.
FOMCA strongly believes that more needs to be done to empower Malaysian consumers through financial literacy programmes. While there are indeed some very useful financial education content in the FEN website, there is a need to actively reach out to consumers in the field to educate and empower consumers to enable responsible financial management and protection against scams.
We need an active reach out policy. We cannot wait for consumers to access the website to educate themselves.
Some suggestions that FOMCA would like to make are:
- Developing an adequate financial literacy programme for pre-schoolers;,
- Relooking and reforming primary and secondary school content on financial education;
- Extensive promotions of financial literacy programmes at Institutions of Higher Learning;
- Financial Literacy programmes through key Non-profits such as Trade Unions (workers), Youth Organisations and Women Organisations;
- Community based financial literacy programmes;
- Financial literacy programmes for young workers in the public and corporate sector;
- Financial literacy programmes for workers in the gig economy;
- Strengthening financial literacy curriculum at teacher training colleges.
Further it is crucial that current financial literacy programmes are evaluated critically in terms of achieving the behaviour change that is intended towards responsible financial management and protections against scams.
Lack of financial literacy is a critical issue in Malaysia affecting the financial wellbeing as well as the overall well-being of Malaysia consumers. It is time to actively seek to bring financial literacy education to the workers and consumers in the field to promote responsible financial management and protect consumers from online and financial scams.
