THE Federation of Malaysian Consumers Associations (Fomca) fully supports Bank Negara Malaysia’s concern that there is 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. Data from various sources indicate clearly that many Malaysians are not managing their finances optimally.
Bank Negara suggests four reasons why Malaysians get into financial difficulties. They have low financial resilience and, thus, are vulnerable to financial shocks, have tendency for instant gratification, no long-term financial planning and lack understanding of risks and returns, making consumers vulnerable to scams and fraud.
In addition, 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, with loses amounting to RM414.8 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.
In Malaysia, we have the National Strategy for Financial Literacy 2019-2023, of which the primary objective is to elevate the financial literacy of Malaysians and promote responsible financial behaviour among consumers.
The National 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 consumers through financial literacy programmes. While there are some 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.
Fomca would like to make some suggestions:
1. Develop an adequate financial literacy programme for pre-schoolers.
2. Relook and reform primary and secondary school content on financial education.
3. Promote financial literacy programmes extensively at Institutions of Higher Learning.
4. Introduce financial literacy programmes through key non-profit organisations such as Trade Unions, Youth Organisations and Women Organisations.
5. Introduce community based financial literacy programmes.
6. Promote financial literacy programmes for young workers in the public and corporate sectors.
7. Introduce financial literacy programmes for workers in the gig economy.
8. Strengthen financial literacy curriculum at teachers training colleges.
Further, 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 protections against scams.
Lack of financial literacy is a critical issue in Malaysia, affecting the financial and overall well-being of consumers. It is time to actively bring financial literacy education to the workers and consumers on the field to promote responsible financial management, and protect consumers from online and financial scams.
Paul Selva Raj
Secretary-General
Fomca
