Written answer by Minister for Law, K Shanmugam, to Parliamentary Question on moneylending tactics
13 Aug 2012 Posted in Parliamentary speeches and responses
Er Dr Lee Bee Wah, Nee Soon GRC
To ask the Minister for Law whether there is any restriction on the tactics used by licensed moneylenders to seek the return of debts from borrowers such as approaching borrowers at their place of employment to collect debts.
Licensed moneylenders may take reasonable steps to recover their debts as long as they do not infringe the law. Such steps include contacting the borrower to ask for repayment and taking legal action to enforce the loan contract. Approaching a debtor at his place of employment to collect debts, whilst potentially embarrassing, does not constitute an offence.
However, moneylenders cannot resort to harassment, vandalism, violence or threatening behavior when recovering debts. Borrowers who encounter such behavior should report the matter to the Police for investigation. Moneylenders found to have committed such offences may have their licence suspended, not renewed or revoked by the Registry of Moneylenders .
We have been closely monitoring the moneylending industry, including the debt collection practices of moneylenders. We tightened regulations last November, by requiring moneylenders to seek the Registry of Moneylenders’ prior approval for the engagement of any person to assist in all aspects of their business, including the collection of debts.
We are studying measures to further tighten debt collection practices of moneylenders. These include stricter regulation as to whom licensed moneylenders may engage as debt collectors, and regulations relating to debt collection practices by moneylenders.
As part of MinLaw’s continuing efforts to enhance the professionalism of the moneylending industry and strengthen its governance, we have been closely consulting with stakeholders, including the Moneylender’s Association of Singapore. We have received suggestions, from the industry, to introduce paid-up capital requirements for moneylenders, similar to the requirements for banks and finance companies. We have studied the suggestions and are in the process of working out the details, such as the quantum, with a view to introducing these and other requirements by the end of this year.
Last updated on 23 Nov 2012