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Public Awareness and Consumer Protection - Core Elements and Effective Practices. 3 May 2007. Presentation by: Wai Keen, Lai General Manager, Policy & International Division Perbadanan Insurans Deposit Malaysia. Agenda.

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3 May 2007

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3 may 2007

Public Awareness and Consumer Protection -

Core Elements and Effective Practices

3 May 2007

Presentation by:

Wai Keen, Lai

General Manager, Policy & International Division

Perbadanan Insurans Deposit Malaysia


Agenda

Agenda

  • Economic setting of Malaysia and some information on its banking system.

  • Strategic approach and rationale for strengthening consumer activism and enhancing consumer protection infrastructure.

  • MDIC’s public awareness strategies.


Economic setting

Economic Setting

Economy:

  • Very open

  • GNI per capita of US$4,650 (2004)

  • An upper middle income economy

    Population:

  • 25 million

  • Very young (74% at ages 39 or below)

  • Majority the middle income category

  • Multiracial

  • 63% stays in urban areas and 37% stays in rural areas

  • High level of literacy, but low level of consumer sophistication and financial literacy


Banking sector

Banking Sector

  • Presence of foreign banks in the domestic banking industry significant. 13 fully foreign owned banks.

  • Malaysian-owned banks reduced from 54 to 9 presently.

  • Some Malaysian banks expanded operations overseas.

  • In 1994, all foreign-owned banking institutions required to be incorporated.

  • Supervisory controls over Malaysian banks venturing overseas directed at ensuring that banks have adequate risk management framework.


Financial sector master plan

Financial Sector Master Plan

  • The Asian crisis brought into focus contagion effects of cross border problems.

  • Post crisis, embarked on several strategies to address future problems.

  • Financial Sector Master Plan (FSMP) released in 2000 - outlined 10 year program to strengthen financial system.

  • The plan is to:

    - lay a strong foundation

    - introduce an increasingly more competitive environment

    - greater international integration

  • FSMP promotes active consumerism – establishment of a deposit insurance system part of the measure.


Consumer education

Consumer Education

  • Malaysia has low financial literacy:

    -Can facilitate speedy transmission of non-fundamental contagion

  • Better informed investors:

    - Less susceptible to unsubstantiated rumours

  • Financial education helps consumers:

    -Make proper assessment of risks, quality and relative prices of diverse and complex financial products

    -with access to information and ability to compare information

  • Financially savvy consumers could impose additional discipline on banks.


Role of deposit insurer

Role of Deposit Insurer

  • Protects wealth.

  • Protects entrepreneurship – SMEs.

  • Prepares readiness of depositors to participate in an increasingly competitive and liberal banking system.


Public awareness strategies

Public Awareness Strategies

  • Core success factor of deposit insurers - Public trust.

  • The more informed the depositors, the more they appreciate benefits and limitations of the system. This enhances public confidence in MDIC.

  • Philosophy:

    - Every depositor has right to deposit insurance information

    -We reach out and not wait to be reached


Core elements of our communications policy

Core Elements of Our Communications Policy

  • Aim: to develop and cultivate a positive image of MDIC.

  • Must communicate openly in a manner which enhances its credibility.

  • Must ensure public have clear understanding of key features and benefits of deposit insurance.

  • Must promote acceptance and confidence that MDIC’s activities and objectives are implemented effectively and efficiently.


Our five strategies

Our Five Strategies

  • Main corporate strategy

    -create awareness of our credibility through annual reports and corporate plans.

    -must have in place systems, policies, practices, better governance, transparency, standards

    -must be seen as a well managed and a well governed

    -credibility and image must be at the forefront of what we do and say

  • Create awareness and understanding of MDIC’s mandate.

  • Promote transparency and accountability.

  • Promote acceptance and confidence.

  • Deliver prompt, courteous, quality and responsive service.


Our initiatives

Our Initiatives

  • Two strategic thrusts of Integrated Communications Plan 2007-2011:

    -Creating awareness of the deposit insurance system

    -Building the Corporation’s authority and credibility

  • Comprehensive target audience.

  • Outlined a number of initiatives, which includes:

    -Print and television advertising

    -Training for member institutions

    -Annual Deposit Insurance Awareness Week in Malaysia

    -Nationwide seminars and roadshows

    -Media interviews and article

    -Participation in relevant public exhibitions

    -Publish and wide dissemination of our policies

    -Reporting on our performance

  • Toll-free public help line, website and information brochures in 6 languages.

  • Allocated about 20% of budget in 2007 for communications initiatives.

  • Collaborate with strategic partners.


Managing cross border contagion

Managing Cross-border Contagion

  • Educate depositors on benefits of deposit insurance.

  • Publicise information regarding which deposit products are covered.

  • In the event of a cross-border failure, work closely with the Central Bank in managing perception and issue a press release or hold media and press conferences on this matter.

  • Strengthen international relations - establish contacts and maintain good working relationships with deposit insurers, especially within IADI.

  • Monitoring the health of financial systems of countries where Malaysian banks have branches.


Conclusion

Conclusion

  • Deposit insurer’s fundamental role to protect wealth and entrepreneurship.

  • Building credible deposit insurance system – with a strong reputation, and public awareness and consumer protection are vital to the operations, credibility and reputation of MDIC.

  • Educating the public is an ongoing process. Efforts in this area would remain a key initiative over the short to medium-term.

  • By extending our public reach, more informed and educated depositors would underpin public confidence and promote financial stability.


Thank you

Thank you


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