Financial Services Act 2013 (FSA)

Every time you tap an e-wallet, take out a car loan or buy a takaful plan, you are dealing with a business that answers to one regulator — Bank Negara Malaysia (BNM) — because of one law. The Financial Services Act 2013 (FSA), cited as Act 758, is Malaysia’s cornerstone statute for the conventional financial sector. It applies throughout Malaysia, is administered and enforced by BNM, and came into force on 30 June 2013. Most explainers written for lawyers stop at the list of repealed acts. This one answers the question an ordinary Malaysian actually has: what does the FSA mean for your money, your rights, and the people who look after it?

What is the Financial Services Act 2013, in plain terms?

The FSA is the rulebook that says who is allowed to run a financial business in Malaysia, how they must behave, and what happens if they break the rules. It gives BNM regulatory and supervisory oversight over financial institutions, payment systems, and the money market and foreign exchange market, all in pursuit of financial stability.

In practice that means the FSA sits behind almost every mainstream money service you use:

• the bank that holds your salary and issues your loan;
• the insurer that pays out on your motor, life or medical policy;
• the payment system or e-wallet that moves your money;
• the licensed money-changer where you buy foreign currency before a trip.

Each of these is regulated because the FSA requires it to be licensed or approved by BNM before it can operate.

When did it come into force, and what did it replace?

The FSA received royal assent on 18 March 2013 and came into force on 30 June 2013 (per P.U. (B) 276/2013). On the same day, its Shariah-compliant sibling, the Islamic Financial Services Act 2013 (IFSA), also came into force.

Two provisions were held back from that date: section 129 and Schedule 9 — which deal with pre-contractual disclosure, representations and remedies for misrepresentation (an insurance consumer-protection measure) — came into operation later, on 1 January 2015 (per P.U. (B) 552/2014).

Before 2013, the sector was governed by several separate, ageing statutes. The FSA unified this framework by consolidating and repealing four conventional laws into one modern, principle-based act:

Repealed law	What it used to govern
Banking and Financial Institutions Act 1989 (BAFIA)	Banks and finance companies
Insurance Act 1996	Conventional insurers and intermediaries
Payment Systems Act 2003	Payment systems and instruments
Exchange Control Act 1953	Foreign exchange administration

The Islamic side of the industry was handled in parallel: the Islamic Banking Act 1983 and the Takaful Act 1984 were repealed under the IFSA rather than the FSA. Together, the FSA and IFSA aim to keep the laws governing financial institutions relevant and effective — to maintain financial stability, support inclusive growth in the financial system and the wider economy, and provide adequate protection for consumers.

Why does the FSA matter to an ordinary Malaysian or SME?

Three things flow from the act that touch everyday life.

First, a licence is a signal you can check. Because the FSA makes licensing compulsory, the fact that a bank, insurer or e-wallet is licensed or approved by BNM is your first line of defence against fraud. A provider that is not on BNM’s register is not a lighter-touch operator — it is an unlawful one.

Second, the FSA strengthened consumer protection. When it came into force, the act introduced greater clarity and transparency, and strengthened business-conduct and consumer-protection requirements — the rules that govern how financial institutions are supposed to treat you.

Third, the FSA is built to protect the system, not just the customer. It brought in provisions to regulate financial holding companies so that risks building up across a whole financial group can be addressed before they threaten stability. For an SME, that structural safety is what keeps the banking system you rely on standing during a shock.

Who is in charge, and how does licensing work?

The single answer is Bank Negara Malaysia, which administers and enforces the act and holds supervisory oversight over financial institutions, payment systems and the money and foreign exchange markets.

The gateway provision is section 8. Section 8(1) provides that no person shall carry on any authorised business unless:

• licensed by the Minister of Finance on BNM’s recommendation (under section 10); or
• approved by Bank Negara Malaysia (under section 11).

That two-track design is why the most systemically important businesses (such as banking and insurance) are licensed at ministerial level on BNM’s advice, while other regulated activities are approved directly by BNM. Either way, the authorisation ultimately runs through the central bank.

What are the penalties for operating without a licence?

This is the part that makes the FSA more than paperwork — and the part most citizen-facing sources never spell out.

Under section 8(3), a person who contravenes the licensing requirement commits an offence and, on conviction, is liable to:

• imprisonment for a term not exceeding ten years; or
• a fine not exceeding fifty million ringgit (RM50 million); or
• both.

Aspect	Detail
Governing provision	Section 8, FSA 2013 (Act 758)
Prohibited act	Carrying on an authorised business without a licence or approval
Maximum imprisonment	10 years
Maximum fine	RM50 million

That penalty is the legal teeth behind the warnings you hear about illegal deposit-taking schemes, unlicensed money-changers and “get rich” investment fronts. They are not merely risky — running one is a serious criminal offence under the FSA.

How is the act structured?

In the Attorney General’s Chambers consolidated text (Act 758, as at 1 August 2021), the FSA is organised into 17 Parts (Part I to Part XVII) containing 281 sections and 16 schedules, applying throughout Malaysia. It spans the full sweep of the conventional sector: licensing and authorisation, prudential and business-conduct requirements, payment systems, the money and foreign exchange markets, and enforcement. Consumer protection sits in Part VIII, “Business Conduct and Consumer Protection” (sections 121-139), while offences and sanctions sit in Part XV, “Enforcement and Penalties” (sections 218-258). The Act has been amended since 2013 — including by the Financial Services (Amendment) Act 2017 — but this structure remains stable in the current consolidated text (its latest amendment, P.U. (A) 51/2021, came into operation on 10 February 2021).

What’s next

To read the exact statutory wording, consult the full text of Act 758 published by Bank Negara Malaysia, or the consolidated version on the Attorney General’s Chambers laws portal. If you want to check whether a specific provider is authorised, look for its licence or approval status on BNM’s own register before you hand over any money — that single check is the everyday power the Financial Services Act 2013 puts in your hands.