LETTER | GOpinjam will charge up to 36 percent interest rates for personal loans. The interest rate for personal loans from commercial banks is generally between four percent to seven percent per annum. Credit cards can only charge 15-18 percent per annum for the credit given. Touch 'n Go is being allowed to charge double that.

Yet it claims to serve the underserved, that is, they claim to help the disadvantaged by charging the poor exorbitant interest rates more than what the commercial banks are charging. What is shocking is that it claims that it adheres to Bank Negara Malaysia's responsible lending guidelines. Can the regulator clarify if charging 36 percent for loans targeted at the underserved adheres to "responsible lending practices"?

Clearly, the regulators and the Ministry of Finance have absolutely no regard for consumer welfare. At this time when consumers are suffering economically due to job loss, income reductions and a significant increase in the cost of living, the government and its GLCs should be taking measures to help consumers through access to low-interest credit, not allow banks and their subsidiaries to charge exorbitant interest rates and cause a critical financial burden on consumers.

The Ministry of Finance and Bank Negara Malaysia, as regulators, should be acting to protect consumers from abusive and unfair practices. Yet they seem not only to give the green light to this unjust scheme but are actually willing to be a part of their marketing team to promote their product. It appears that for the Ministry of Finance, it is more important that banks make exorbitant profits rather than protect consumers' welfare and well-being.

Touch 'n Go claims that it would be transparent and upfront. Clearly, it is not enough to be transparent. Banks are expected to act in a manner that is fair, just and non-abusive to consumers. The regulator's function is to ensure that.

Ah longs and loan sharks can also be transparent. Will they be licenced next?

It is fortunate that former prime minister Najib Abdul Razak, who was also the minister of finance, has the interest and welfare of consumers at heart. Clearly, he has seen the injustice and the financial burden it would put on consumers, especially low-income consumers and has called for fairness and justice.

Fomca calls on the government to act urgently to stop the profiteering and critical harm that this GOpinjam Scheme imposes on consumers. Interest rates for loans should not exceed that which is charged by credit cards.

And if the government is genuinely concerned that the poor would not have access to credit, then it should have schemes in which the interest rate is lower than credit cards, not higher. But if the government is only interested in banks making exorbitant profits, then it would turn a blind eye to consumer protection and consumer welfare. It appears that financial consumer protection is dead.

Fomca truly regrets this stand.

PAUL SELVA RAJ is the secretary-general of the Federation of Malaysian Consumers Associations (Fomca).

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.