The Government has accepted majority of recommendations put forward by an advisory committee and will implement them progressively from July this year.
SINGAPORE: People who borrow from licensed moneylenders will get more protection under a set of recommendations put forward by an advisory committee. The Government has accepted the majority of these recommendations, and will implement them progressively from July this year.
To protect borrowers, caps will be placed on interest rates.
Currently, there is no cap on interest and late interest rates for borrowers who earn more than S$30,000 annually. Moneylenders can also charge the borrower additional fees when, for example, GIRO repayments are unsuccessful or if dishonoured cheques are issued.
There is also currently no cap on the total borrowing costs for moneylending loans.
When the new measures kick in, moneylenders will be restricted to maximum rates – for example, they cannot charge interest of more than 4 per cent per month, and this has to be on a reducing balance basis. If the borrower is late in his repayments, moneylenders can charge a late interest – but this also must not exceed more than 4 per cent.
In addition, the total borrowing cost will not exceed 100 per cent of the principal loan sum – which will prevent debts from spiraling out of control.
Chairman of the Advisory Committee Manu Bhaskaran said data has been carefully studied to ensure that the industry remains commercially viable, even with the new caps.
“We completely accept that there will always be a class of distressed borrowers who will not be able to secure loans that they need urgently, from banks and other financial institutions,” he said. “So there is a role for a moneylending industry. And once you accept that, you must accept that you should allow them to have a decent return, taking into account the risk that they face, which is much higher.”
A Moneylenders Credit Bureau, which will give moneylenders access to information on borrowers among other things, will also be set up. This will help them get a better sense of risk when deciding to lend.
A total of 15 recommendations were put forward by the committee, and 12 were accepted the Government. The remaining three – which includes allowing moneylenders to advertise in newspapers using strict templates – are still being mulled over.
Minister of Law K Shanmugam told reporters this is because advertising could lead to increased borrowing, which should not be encouraged. “We noticed a shift in pattern when we allowed advertising, and when we shut off advertising. There was a drop,” Mr Shanmugam explained. “So our approach is to try and see how we can structure it such as those who really need, will go and find a way of borrowing but we don’t want to induce demand through advertising. We want to be careful about that.”
Sources: Channel NewsAsia
SINGAPORE – A 69-year-old borrower was told to go to a specific address to pick up the loan. He was asked to slip his NRIC under the door.
He did so but did not get any response despite knocking on the door repeatedly. He then called the police to help retrieve his NRIC.
The address turned out to be that of a 54-year-old debtor who had defaulted on his loan repayments.
The Police said in a release on Friday that this is a new tactic employed by loan sharks to use prospective borrowers to harass debtors.
Investigations are currently ongoing against the prospective borrower for an offence of harassment by causing annoyance under the Moneylenders Act.
Borrowers who commit such acts may be liable for an offence under the Moneylenders Act (Revised Edition 2010). First time offenders found guilty of loan shark harassment will be jailed for up to five years, fined between $5,000 and $50,000, and may be given between three and six strokes of the cane.
Further investigations also showed that the debtor had also assisted loan sharks in their activities by opening a bank account for their use. He has been arrested.
A first time offender found guilty of assisting loan sharks in their unlawful activities may be jailed for up to four years and fined between $30,000 and $300,000.
Members of public are advised to stay away from loan sharks and not to borrow money or assist the unlicensed moneylenders in any way.
The public can call the X-Ah-Long hotline at 1800 924 5664 if they have any information on anyone who could be involved in illegal loan shark activities or 999 for urgent Police assistance.
Sources: The Straits Times
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How do you tell a if a Moneylender in Singapore is a legal one? Here are some tell-tale signs:
According to the IPTO rules and privacy acts, moneylenders should not advertise their services in the form of telemarketing or SMS marketing. The penalties for advertising these services are harsh. Moneylenders can easily lose their licenses if they are caught.
However, many illegal money lending services use SMS and telemarketing to market their services to unsuspecting consumers. It is important to avoid these services.
Moneylenders often claim that they are able to provide instant cash for approved loans. The truth is that a legal moneylender will never use online money transfers to make payments for money. Only illegal moneylenders would use such methods as there would be no paperwork and therefore no way of tracing where the money came from.
Legal moneylenders will require you to come into the office to sign the contract before they can give you the money. This applies even for those who allow you to apply for the loan online.
The easiest way to identify a legitimate moneylender is to check with the Registry of Moneylenders. All licensed moneylenders are registered on this registry. They are required to abide by certain laws and regulations in order to maintain their registered status. Only moneylenders serious about running a legitimate business will strive to maintain their license by abiding with all the regulations.
A legal moneylender takes the personal information of its clients seriously. Such lenders will never require their clients to disclose their personal information over the phone. It is important for you never to divulge information such as your Sing Pass details over the phone to a third party.
SingPass verification ought to be done on site and in person. Legal moneylenders will require you to come with your personal details for verification when your application has been approved.
It is important to carry out your own research on the lender you are interested in. Apart from checking to ensure that it is registered with the Registry of Moneylenders, it is also important to look for further information about the lender online. There are various websites that provide independent reviews on moneylenders. You can visit these websites to see what others are saying about the lender you are interested in. This will help you avoid any illegal moneylenders.
SINGAPORE: Two men have been arrested for suspected involvement in helping an unlicensed moneylending syndicate, police said on Thursday (Jun 18).
Preliminary investigations revealed that the men, both aged 48, were believed to have assisted an unlicensed moneylending syndicate to obtain Automated Teller Machine (ATM) cards and Personal Identification Numbers (PINs) from debtors, said police. These were used to perform ATM transactions related to unlicensed moneylending businesses.
The suspects were arrested near Bukit Batok Central on Wednesday. Police also seized four ATM cards and three mobile phones as case exhibits.
Both suspects will be charged in court on Friday. First-time offenders found guilty of carrying on the business as an unlicensed moneylender or helping in the unlicensed moneylending business could face a fine of between S$30,000 and S$300,000, up to four years in jail and up to six strokes of the cane.
Sources: Channel NewsAsia
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