The licensed money lender industry in Singapore has gotten its run of bad publicity for 2015 given the recent events occurred amongst debt collection. Debates have been brought up on how debt collection can be made better.
Licensed Money Lender Scene
This was due to a recent scene in the licensed money lender industry in Singapore when seven employees of Double Ace Associates confronted a stall owner at Funan DigitalLife Mall foodcourt and created a big scene during the busy lunch hour. All offenders were charged with unlawful assembly just last month.
Licensing Debt Collection in Singapore
Licensed money lender hire debt-collection companies from time to time for long standing debts that they cannot handle and this incident highlighted on how a loan can go horribly wrong.
“Licensing the debt-collection industry could clean up its image, and clamp down on the use of harassment tactics” – suggested by Mr David Poh, President of the Moneylender’s Association of Singapore, has been backed by the Credit Collection Association of Singapore (CCAS).
This matter of debt collection has been raised in Parliament last month when MP Foo Mee Har mentioned whether debt collectors should abide by a code of conduct, and if the Government of Singapore would consider introducing laws that govern fair deb-collection.
Others have mentioned that should such a code of conduct be in place, there will be a lot of infrastructure that needs to be put up for case investigation. Hence the onus should be on the licensed money lender, to ensure their debt collectors do not use violence or high pressure tactics.
“Moneylenders found to have committed offences may have their licences suspended, not renewed or revoked by the registry,” Senior Minister of State for Law Indranee Rajah
Late Fee Charges by Licensed Money Lender
Late last year, an article about how a borrower got a small loan and incurred a large debt due to the late fee charges.
Suggestions have been made to cap the penalty late charges. However this has led to many licensed money lenders protesting that the new rules could kill their business.
This is why at Empire Global we always encourage borrowers to negotiate early and fully understand the terms involved. Terms from different licensed money lender vary greatly. All these could lead up to you getting into greater debt.
Licensed Money Lender Woes & The Review Committee
With the advisory committee proposing major changes of which a controversial interest rate cap of 4 percent per month has led to an outburst in the licensed moneylending industry.
Many licensed money lender in Singapore have mentioned that the cap will lead to borrowers not paying back instead. Without late penalty charges, it will be tougher to collect back their money.
Borrowers have a higher chance to default on their payments. Leading to lower profit margins by the money lenders.
The advisory committee basis on the proposed interest rates is also referred to prevailing interest rates charged by licensed moneylenders in jurisdictions like Hong Kong, Australia, Japan and Britain, which range from 1.5 to 4 per cent.
We at Empire Global are looking at ways to improve our infrastructure and to work with the interest rate cap. Hopefully, the Ministry of Law considerations on relaxing advertising restrictions on newspapers will be implemented.