Inadequacy of Consumer Protection from Unfair Contract Terms in Musharakah Mutanaqisah Home Financing In Malaysia


  • Syuhaeda Mat Ali Universiti Teknologi Mara, Shah Alam, Selangor
  • Rusni Hassan IIUM Institute of Islamic Banking and Finance,(IIiBF), International Islamic University Malaysia
  • Ahmad Azam Othman Ahmad Ibrahim Kulliyyah of Laws, IIUM


Musharakah Mutanaqisah Home Financing, reform, legislation, standard form of contract.


Musharakah Mutanaqisah is one of the Islamic home financing products which has gained popular demand from the public in Malaysia. However, the terms and conditions of legal documentation of Musharakah Mutanaqisah Home Financing which were usually prepared by solicitors for Islamic financing institutions (“IFIsâ€) may have affected the welfare of consumers  especially when most of the terms and conditions of legal documentations favoured the IFIs. In these circumstances, the consumers have no choice but to abide by the terms stipulated by the IFIs.This paper examines the adequacy of present legislation in Malaysia namely Islamic Financial Services Act 2013, Financial Services Act 2013, Shariah Standard and Guidelines: Prohibited Business Conduct policy, Consumer Protection Act 1999, Consumer Protection (Amendment) Act 2010 and the Contracts Act 1950 relating to unfair terms of contract in Musharakah Mutanaqisah Home Financing. The methodology adopted in this paper is statutory analysis whereby the relevant legislation are analysed. The analysis reveals that the legislation are not sufficient to regulate unfair terms of contract in Musharakah Mutanaqisah Home Financing in Malaysia. To ensure the protection of the consumers in Musharakah Mutanaqisah Home Financing, this paper recommends the present legislation, particularly Consumer Protection Act 1999 and Contracts Act 1950  be reformed.

 Musharakah Mutanaqisah Home Financing, reform, legislation, standard form of contract.


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How to Cite

Ali, S. M., Hassan, R., & Othman, A. A. (2017). Inadequacy of Consumer Protection from Unfair Contract Terms in Musharakah Mutanaqisah Home Financing In Malaysia. Journal of Islamic Finance, 6, 231–241. Retrieved from