A SUDDEN change to the six-month moratorium on hire purchase (HP) and fixed-rate Islamic financing loans will only add to the people’s burden, said the Federation of Malaysian Consumer Associations (Fomca).

Fomca chief executive Paul Selvaraj said Bank Negara Malaysia (BNM) seems to be overlooking the plight of the public amid the Covid-19 crisis.

“In this instance, especially in this real near tragedy where people are facing so many issues, like loss of jobs, loss of income, an uncertain future… to put this additional burden on consumers is very unfair,” he told The Malaysian Insight.

He was referring to BNM’s announcement yesterday that banks can charge customers additional interest on their HP loans should they opt for the moratorium on repayment.

The Association of Banks in Malaysia has said customers will not be charged extra interest if they settle their accumulated six months’ deferred payments together with their October instalment.

This appears to differ from what Prime Minister Muhyiddin Yassin said in March when he announced the moratorium in support of government efforts to help individuals, small and medium enterprises, and corporations mitigate the impact of the coronavirus pandemic.

The measures include a deferment of all loan repayments for six months effective April 1.

“With this sudden procedural change, people are expected to come up with the six months’ accumulated interest charged to borrowers over the moratorium period,” said Selvaraj.

“That is absolutely absurd.”

He said the central bank should understand Malaysians’ burden, with many having lost their jobs due to the movement-control order (MCO) enforced to halt the virus’ spread.

BNM should focus on reducing the public’s financial burden instead of helping banks gain profit, he said.

“As the central bank, they should not only look at banks making profits, but also consumers’ welfare. They should put that ahead of what banks want.

“Consumers’ well-being should be given priority.”

He said the majority of Malaysians do not have the means to pay the accumulated interest in one go, adding that private sector employees have been badly affected and will need to recover post-MCO.

“Nobody has the capacity to pay in bulk. According to recent news reports, most businesses, such as hotels, are closing. Private sector workers are badly affected.

“Even after the MCO, it is going to take time for them to recover. Even those who have been retrenched and are looking for new jobs will need to take a big pay cut. All this is a major burden on consumers.”

He expressed hope that BNM will take into consideration the difficulties faced by the people and review its recent decision.

“Banks want to collect as much as they can, but that is the whole point of a regulator. If you don’t have a regulator, there is no protection for consumers.

“We hope BNM will put its foot down and protect consumers in this instance.”

Today, the central bank expressed regret over its announcement on the procedural change to the six-month moratorium that has caused confusion.

Finance Minister Tengku Zafrul Tengku Abdul Aziz, meanwhile, said BNM’s latest FAQs provide clarification.

“What is clear now is that interest is still accrued, but not compounded.

“More than a month ago, when the loan moratorium was first announced by BNM, there was some confusion, I think because communication was unclear. But thankfully, the bank this morning issued its FAQs to clear up the confusion. I hope we do not speculate on this further.”

He said all banks have to comply with the Hire Purchase Act 1967 and shariah guidelines, whereby they have to get customers’ consent for the moratorium.

He added that BNM should improve its communication with customers. – May 1, 2020.