PARLIAMENT | Putrajaya MP Radzi Jidin has proposed a dedicated “super-regulatory body” to oversee major non-bank financial institutions managing public savings and funds.
Debating the royal commission of inquiry report on Tabung Haji in the Dewan Rakyat today, Radzi said the inquiry should trigger a broader overhaul covering not only Tabung Haji, but also the Armed Forces Fund Board (LTAT), Employees Provident Fund (EPF), Retirement Fund Incorporated (KWAP), Permodalan Nasional Berhad (PNB) and PTPTN savings.
“At present, we do not have a clear and comprehensive regulatory framework for Non-Bank Financial Institutions (NBFIs),” he said.
Radzi noted that the institutions are governed under separate laws and overseen by different ministries or agencies.
He argued that failures at such institutions could affect not only depositors, but also the government and the wider economy.
“We must remember that the failure of any of these institutions would not only affect depositors, but also the government and the country.
“For example, the failure of Tabung Haji resulted in the government having to bear RM27.8 billion in sukuk to rescue the institution,” he said.
Radzi said the RCI recommendation for Tabung Haji’s fund management to come under Securities Commission supervision did not go far enough.
“The RCI’s recommendation for Tabung Haji’s fund management to be supervised by the Securities Commission is insufficient. A comprehensive approach is needed.
“What happens if, after this, there are problems at LTAT or KWAP, for example? Are we going to set up another RCI?” he asked.
He suggested Malaysia consider Australia’s Prudential Regulation Authority as a model and cited former Bank Negara governor Muhammad Ibrahim, who had similarly proposed a “super-regulatory body”.
“The views expressed are in line with what I stated earlier. I propose that the government sit down with Muhammad and regulatory experts to discuss this ‘super-regulatory body’.
“Let us seize this opportunity to carry out a comprehensive restructuring of the regulatory framework!” he added.
Governance
Aminuddin Harun (Harapan-Port Dickson), meanwhile, focused on tightening Tabung Haji’s internal governance.
He noted that the RCI had recommended barring active politicians from serving as chairperson or board members of Tabung Haji and its subsidiaries, as well as introducing expertise criteria for board appointments.
“I propose that we go further: every board candidate must undergo a clear screening process based on integrity and experience in investment, Islamic finance, risk management, audit, accounting, law, corporate governance and haj management.
“Conflicts of interest must also be declared. Tabung Haji must be managed by qualified people, not merely people with connections,” he said.
Aminuddin also cautioned against equating investment losses with misconduct.
“We must be fair when discussing investments. Investments carry risks. Not every loss means that wrongdoing has occurred.
“But we must be able to distinguish between losses caused by market fluctuations and losses resulting from negligent decisions, conflicts of interest or failures in governance processes.”
He said the RCI had recommended forensic audits into four investments that suffered declines in value, and called for closer scrutiny of hibah distributions.
“We must also take the issue of hibah very seriously. A depositor may look at one figure: how much hibah did I receive this year? But behind that figure are far more important questions.” - Mkini
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