Written Answer by Minister for Law K Shanmugam to PQ on Oversight of Administrative Fees Charged by Pawnbrokers and Moneylenders
3 July 2023 Posted in Parliamentary speeches and responses
Ms Carrie Tan (Nee Soon GRC)
To ask the Minister for Law (a) how does the Ministry maintain oversight of the administrative fees charged by pawnbrokers and moneylenders; (b) whether the Ministry is aware of cases where pawnbrokers and moneylenders are charging additional administrative charges on the pretext of encouraging digital modes of payment; and (c) what action will the Ministry take against such pawnbrokers and moneylenders and what recourse do members of the public subjected to such fees have.
1. Pawnbrokers and licensed moneylenders operate under different regulatory regimes. They have different frameworks applicable to the regulation of administrative fees charged.
2. Pawnbrokers offering cashless payment methods to pawners may impose an administrative fee of up to $2 for each pawn ticket issued when a new pledge is made, or when the redemption period is extended.
3. This administrative fee was introduced in January 2023 to encourage digitalisation in the industry, by helping the industry defray costs incurred from adopting third-party cashless payment services. Such adoption increases the convenience for pawners who now have the option of using cashless payment modes such as NETs and PayPal.
4. On the other hand, licensed moneylenders may impose an administrative fee of up to 10% of the loan quantum for each loan disbursed. This administrative fee was implemented to help licensed moneylenders defray costs associated with the risk of operating the moneylending business, such as the cost of loan defaults.
5. Pawnbrokers and licensed moneylenders are only permitted to impose administrative fees according to the moneylending and pawnbroking laws. The Registries of Moneylenders and Pawnbrokers conduct regular inspections on, and investigate any alleged misconduct by, the licensed moneylenders and pawnbrokers to ensure their compliance. Any licensed moneylender or pawnbroker charging fees not permitted by law may be subject to regulatory actions such as issuance of a warning, prosecution, and suspension or revocation of its licence.
6. Members of the public who believe they have been wrongfully subjected to fees by any licensed moneylender or pawnbroker may lodge a report through MinLaw’s website.
Last updated on 3 July 2023