With effect from 26 January 2016, licensed moneylenders are required to abide by the new measures introduced by the Registry of Moneylenders. The new measures act as a supplement to the current Moneylenders Act and Rules, which can be found here.
The Registry takes a very serious view of moneylenders overcharging their borrowers and has thus introduced these new measures aimed clamping down on abuses by errant moneylenders. The supplement was introduced after the outcries by borrowers over the “misleading and abusive” practices of several licensees have been brought to the Registry’s attention. The key points of the directive required of licensed lenders include:
- Stop granting loans to borrowers who might struggle to make repayments, which in turn incur other administrative or finance charges that cause the snowballing of debts
- Clear explanation of the terms and conditions of loans, and how and when interests and fees are imposed
- Written cautionary statement on exploitative loans before such a loan can be granted
All licensed moneylenders were warned to cease unwanted practices and to implement the above directions immediately. If licensed moneylenders were to be found to have breached any of the newly issued measures or relevant legislation, they will face a fine or an imprisonment term on each charge, said the Registry. The registry carries out regular inspections to ensure conformance and compliant of the Act and Rules.
Mr. Peter Tan, President of the Moneylenders’ Association of Singapore, has expressed his welcome for the new directions. He deems it necessary as it will prevent unscrupulous lenders from splitting loans and then adding in as many administrative or finance fees/charges as they possibly could. The black sheep in the industry have tarnished the image and reputation some lenders have worked so hard to build up over years. However, now that the new measures have been fiercely enforced by the authorities, Mr. Tan expects that the unwanted practices will be curbed and eliminated. Similarly, borrowers are now deterred from making unnecessary and groundless complaints to MinLaw with the mandatory requirements now to clearly explain the terms and conditions of each loan. On top of that, written cautionary statements will also be provided to the borrowers to ensure they understand; thus, borrowers cannot claim that they have been misled.