Moneylenders (Amendment) Bill 2018 to Support Safer Access to Credit for Borrowers

08 JAN 2018

8 Jan 2018 Posted in Press releases

  1. Parliament passed the Moneylenders (Amendment) Bill[1] today. It supports safer access to credit by providing better protection for borrowers, strengthening the regulation of licensed moneylenders and professionalising the moneylending industry.

  2. The Bill implements the recommendations by the Advisory Committee on Moneylending (ACML).

Better Protection for Borrowers

  1. The Bill allows the Minister for Law to introduce an aggregate loan cap in the Moneylenders Rules to set an overall limit on the amount that an individual[2] may borrow from all moneylenders, combined. It replaces the present loan caps, which only limit the amount that an individual may borrow from any single moneylender. The following caps will be introduced:
  1. No more than $3,000 from all moneylenders combined for individuals earning less than $20,000 a year; and
  2. No more than six times of individual’s monthly income from all moneylenders combined, for all other borrowers.
  1. The Ministry of Law (MinLaw) estimates that less than 2% of Singaporean borrowers who took out loans between March 2016 and March 2017 have an outstanding balance exceeding the aggregate loan cap. MinLaw is working with voluntary welfare organisations (VWOs) to help such borrowers manage their debt.
  1. The Bill also introduces a new regulatory regime for the Moneylenders Credit Bureau (MLCB) to facilitate the implementation of the aggregate loan cap; protect the confidentiality, security, and integrity of borrower data; and ensure the smooth operation of the MLCB.

Strengthening the Regulation of Moneylenders

  1. The Bill better enables the Registrar of Moneylenders to exclude undesirable persons from the moneylending industry by imposing tighter approval requirements on the shareholders and personnel of moneylending businesses.
  1. The Bill also tightens existing requirements on loan contracts, such as making it an offence to enter into a loan contract that breaches regulatory caps on the late fees, rate of interest or late interest.

Professionalising the moneylending industry

  1. The amendments will require all moneylenders to be incorporated as companies limited by shares with a minimum paid-up capital of $100,000. This amount is in line with the ACML’s recommendation, and will be prescribed in the Moneylenders Rules.
  1. To improve transparency and accountability, the Bill also requires all moneylenders, regardless of size, to submit annual audited accounts to the Registrar.
  1. The Registry of Moneylenders has been working with the industry to prepare for these changes. To date, almost 70 per cent of licensed moneylenders are registered as companies.
  1. MinLaw will complement these reforms to professionalise the moneylending industry by encouraging good business practices and better business models that can benefit borrowers. To spur these improvements, MinLaw will explore lifting the current moratorium in a limited and controlled fashion, to allow a few new players with established track records in related financial areas to pilot new business models. More details will be announced in due course.

[1] https://www.mlaw.gov.sg/content/minlaw/en/news/press-releases/moneylenders–amendment–bill.html
[2] The cap only applies to Singapore citizens and permanent residents.

Last updated on 08 Jan 2018