Financial abuse: Why Malaysia must expand its regulatory definition

2026-03-26 - 01:10

From Aishath Muneeza In Malaysia, conversations around financial consumer protection have gained momentum in recent years. Bank Negara Malaysia (BNM) has strengthened policies to safeguard customers disadvantaged by age, disability, literacy gaps, or socioeconomic barriers. The March 2024 revision of the Fair Treatment of Financial Consumers Policy Document was a milestone, offering a more comprehensive definition of “vulnerable consumer”. Yet one form of vulnerability remains missing from the regulatory conversation: financial abuse. The hidden face of financial abuse Financial abuse occurs when someone exerts control over another person’s money, assets, or financial decisions. It is not about poor financial literacy or sudden hardship, rather it is about power, coercion, and exploitation. Take for example the case of Amina, a 35-year-old working professional. She is literate, employed, and healthy, with savings and financial knowledge. On paper, she is not vulnerable. Yet, her husband forces her salary into his account, denies her access to her own bank cards, and threatens her if she attempts financial independence. Under Malaysia’s current framework, Amina does not qualify as a “vulnerable consumer”. However, in reality, she is living in dependence, stripped of her financial autonomy. This gap illustrates why financial abuse must be explicitly recognised in our regulatory approach. Why it matters for Malaysia Financial abuse is not rare, it is deeply embedded in two specific contexts: Domestic relationships: where money is weaponised as a tool of control. Elder exploitation: where older Malaysians, especially those with health issues or limited digital literacy, are pressured into parting with assets. This is especially urgent given Malaysia’s trajectory as an ageing nation – by 2030, 15% of Malaysians will be over 60, raising risks of elder exploitation. And with the rapid adoption of digital banking, this exposes less tech-savvy users to coercion and fraud. Without recognising financial abuse as a vulnerability, survivors remain invisible to institutions that could intervene. Lessons from abroad Malaysia does not have to start from scratch – we can take inspiration from other nations that have successfully built strong frameworks to tackle financial abuse. United Kingdom: the Financial Conduct Authority’s (FCA) guidance on treating vulnerable customers fairly requires banks to identify red flags such as unusual account activity or coerced transactions, and embed protections into governance, product design, and staff training. Vulnerability is treated as mainstream, not marginal. Australia: the Australian Banking Association (ABA) recognises financial abuse as domestic and family violence. Banks are expected to suspend joint accounts if abuse is suspected, offer safe new accounts, and train staff in trauma-informed communication. Explicit guidelines acknowledge financial abuse as a human rights violation, not just misconduct. US: the Consumer Financial Protection Bureau (CFPB) has long recognised elder financial exploitation. Banks are empowered to secure accounts, place holds on suspicious transactions, and report abuse without fear of breaching privacy laws. Elder abuse is treated as one of the most pervasive threats to consumer safety. These lessons show that financial institutions can, and must, play a frontline role. What Malaysia needs to do To move forward, Malaysia should adopt a multi-pronged approach: Expand the regulatory definition of vulnerability: explicitly include financial abuse in BNM’s definition of vulnerable consumers. Survivors should not be left invisible simply because they are educated, employed, or healthy. Mandate survivor-centred banking policies: banks must provide safe accounts, discreet communication channels, and flexibility in debt restructuring. Inspired by Australia, joint accounts should be suspended if abuse is suspected, and survivors should be given control over their own funds without penalty. Train frontline staff: bank tellers, call-centre agents, and insurance representatives must be equipped to spot signs of coercion. If they spot customers appearing fearful, accompanied by controlling companions, or making uncharacteristic withdrawals, they must be able to proceed with caution and sensitivity. Build cross-sector collaboration: financial abuse cannot be solved by banks alone. Regulators should establish referral pathways linking financial institutions to welfare agencies, NGOs, shelters, and legal aid providers. Launch public awareness campaigns: multilingual, stigma-free nationwide campaigns can help Malaysians recognise signs of financial abuse and seek help. This mirrors the UK and US experiences, where public education has been a critical prevention tool. The path forward Financial abuse undermines independence, perpetuates poverty, and erodes human dignity. By updating its consumer protection framework, Malaysia has a real opportunity to lead in Asia. Protecting vulnerable consumers must mean protecting all forms of vulnerability, including those hidden within families and relationships of trust. Malaysia’s financial institutions can take inspiration from the UK, Australia, and the US to embed safeguards into governance, empower staff to act, and create survivor-centred policies. Doing so will not only protect victims but also strengthen trust in the financial system. Because no Malaysian should lose their freedom, dignity, or future because of financial abuse. Read also: Part 1 : Financial abuse: the hidden crime we must recognise Part 2: Financial abuse: breaking the silence, building solutions Aishath Muneeza is a senior Islamic finance consultant at the United Nations Population Fund (UNFPA) in Malaysia. The views expressed are those of the writer and do not necessarily reflect those of FMT.