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Being repeatedly contacted, threatened or intimidated by debt collectors can be stressful, particularly when a non-performing loan has been sold to another party.
But borrowers should know that the transfer of their debt does not take away their rights, according to the Suruhanjaya Kredit Pengguna (SKP).
The commission said borrowers who face improper conduct by lenders, impaired loan buyers or debt collection agencies should first lodge a complaint directly with the company involved.
Regulated entities are required to have proper complaints-handling mechanisms and are expected to address consumer complaints at the first instance.
“Whether the debt is managed by the original lender, an impaired loan buyer or a debt collection agency, all regulated entities are required to comply with the same standards of fair treatment and responsible conduct,” SKP told TRP in a written reply.
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The commission said the Conduct Standards prohibit unreasonable debt collection practices, including excessive contact, harassment, intimidation, threats and public shaming.
This means borrowers should continue to have access to fair treatment, complaint resolution and appropriate assistance even after their debt changes hands.
If a complaint cannot be resolved or the borrower is dissatisfied with the company’s response, the matter can be escalated to SKP through its CARE Portal.
SKP said it would assess complaints and engage the relevant regulated entity where necessary, with enforcement action possible if a breach of the Consumer Credit Act 2025 or applicable standards is identified.
For borrowers struggling to repay their debts, SKP said they should not wait until their financial situation deteriorates further before seeking help.
Borrowers can explore options such as debt restructuring or other suitable repayment arrangements.
READ MORE: Banks Can Legally Sell Bad Loans, Says SKP
Those dealing with multiple creditors can also approach debt counselling and management agencies (DCMAs) registered with SKP, which can assist in negotiating with creditors and developing a more manageable repayment plan.
SKP also stressed that borrowers continue to be protected even when their loans are sold.
Under the Consumer Credit Act 2025 and Conduct Standards, borrowers affected by the disposal of impaired loans must generally be given advance written notice and an opportunity to regularise or settle their debts before the transfer takes place.
They must also be informed about the identity of the new owner and continue to receive the same protections concerning fair treatment, complaints handling and responsible debt collection.
Another safeguard is that impaired loan buyers are restricted from selling purchased impaired loans to another party, which SKP said would reduce confusion over who owns and manages a debt.
“SKP’s regulatory intent is that borrowers are treated fairly and not subjected to aggressive collection practices as a result of the sale of their loan,” the commission said.
As the newly established regulator continues to monitor the industry, SKP said complaints data, consumer feedback and market developments would be important in assessing whether further regulatory measures are needed.
For now, however, the commission said its priority was ensuring existing protections are properly implemented and consistently followed across the industry.
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