THE Federation of Malaysian Consumers Association (Fomca) fully supports Bank Negara Malaysia’s concern that there is a lack of financial literacy among 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 Malaysians get into financial difficulties. The reasons are low financial resilience and thus vulnerability to financial crises, the 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 is 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 losses amounting to RM 414.8 million. Several agencies including the police force, Bank Negara, and 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 in strengthening financial resilience and responsible financial management could be the key to 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 strategy is expected to be achieved through the Financial Education Network (FEN), 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 is 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 outreach 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 preschoolers;

– Reforming primary and secondary school content on financial education;

– Extensive promotion 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 curricula at teacher training colleges.

It is crucial that current financial literacy programmes are evaluated critically in terms of achieving the behavioural change that is intended towards responsible financial management and protection against scams.

The lack of financial literacy is a critical issue in Malaysia affecting the financial as well as overall well-being of Malaysian consumers. It is time to actively seek to bring financial literacy education to workers and consumers to promote responsible financial management and protect consumers from online and financial scams. – October 5, 2022.

* Paul Selva Raj is Fomca secretary-general.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.