Major Regulatory Shift: Bank of Thailand to oversee automotive hire-purchase and leasing

On 5 June 2025, the Royal Decree on the Regulation of Hire Purchase and Leasing of Automobiles and Motorcycles under the Financial Institutions Business Act B.E. 2551 (2008), B.E. 2568 (2025) (Royal Decree) was officially published in the Government Gazette. The decree will take effect 180 days from the date of publication, on 2 December 2025. The Royal Decree brings the business of hire-purchase and leasing for cars and motorcycles under the direct supervision of the Bank of Thailand (the BOT).

The change aims to raise industry standards, enhance consumer protection, and strengthen the nation’s financial stability.

The issuance of the Royal Decree was driven by significant economic concerns and the need to address a major regulatory gap. The auto hire purchase and leasing market, with outstanding credit of approximately THB1.6 trillion, represents a substantial portion of the national economy and accounts for about 10% of Thailand's total household debt. The primary economic purpose for issuing this Royal Decree is to formalise this vital financial sector, establish clear and fair standards, protect customers, and manage the systemic risks associated with this large component of household debt to maintain overall economic and financial stability.

 

Understanding the Scope: Who is Covered?

The new oversight is "activity-based", meaning it applies based on the nature of the business (any juristic person (i.e., a company) that conducts hire-purchase or leasing of cars and motorcycles as a normal part of its business) rather than legal form.

Key points on scope:

• Included Businesses: All non-bank companies providing vehicle hire-purchase and leasing.
• Included Vehicles: It covers a wide range of vehicles defined under the Motor Car Act B.E. 2522, as amended, including cars and motorcycles.
• Exemptions: The rules do not apply to existing financial institutions, Specialized Financial Institutions (SFIs), cooperatives or individuals, as they are already governed by other regulatory bodies.

 

New Rules of the Road: Key Obligations for Operators

Businesses in this sector must now prepare to meet a new set of standards enforced by the BOT. The primary obligations include:

• Full Transparency: Operators must clearly display all interest rates, service fees, and other charges at their offices and in any media for the public and customer's information. This information must also be reported to the BOT.
• Consumer Protection: The BOT will issue guidelines on contract terms, benefit calculation methods, and other areas to protect consumers from unfair practices.
• Mandatory Registration& Reporting: Business must formally report themselves to the BOT within the designated timeline. Operators must adhere to BOT standards regarding interest rates, fees, consumer protection, and, if required, macroprudential measures. They will also be required to submit regular reports and financial statements as requested by the BOT, ensuring all data is accurate and complete.
• Standardised Accounting: Businesses must maintain accounting records that truthfully reflect their financial performance and status, adhering to recognised accounting standards.

 

The New Watchdog: The BOT's Supervisory Powers

The BOT is now empowered with significant authority to regulate the sector effectively. Its powers include:

• Setting Financial Rules: The BOT can issue rules relating to business operations and consumer protection, including setting caps on interest rates, fees, down payments, and penalties.
• Inspection and Investigation: The BOT can appoint inspectors to examine a company's business activities, assets, and liabilities. These inspectors have the authority to enter premises and demand information from management and staff.
• EnforcementActions: If a business fails to comply, the BOT can issue warning or formal orders to cease the non-compliant action. In cases of serious violations or practices that cause significant harm to consumers, the BOT can order a temporary suspension of all or part of the business.

 

What's Next: Timeline and Preparation

The 180-day period before the law takes full effect is designed to give businesses time to prepare. The BOT has outlined a tentative schedule that includes focus groups with industry associations, public hearings on new BOT announcements, and the official start of the business operator registration period.

All operators in the sector should begin reviewing their contracts, fee structures, and internal processes now to ensure a smooth transition and full compliance when the Royal Decree becomes effective. This may also affect the operators' business operations and plans, as well as consumers' behaviour.