Parliament: New loan cap to protect borrowers under proposed changes to Moneylenders Act

Under the new loan cap, individuals with annual income of less than $20,000 may borrow up to $3,000 from all moneylenders combined.
Under the new loan cap, individuals with annual income of less than $20,000 may borrow up to $3,000 from all moneylenders combined.PHOTO: LIANHE ZAOBAO

SINGAPORE - Borrowers will have their loans capped at an amount that applies across all licensed moneylenders, under proposed changes to the Moneylenders Act.

Currently, there is a cap on loans made with each individual moneylender but borrowers can still approach other registered moneylenders.

To prevent individuals from borrowing beyond their own means, an aggregate loan cap has been proposed under the Moneylenders (Amendment) Bill tabled in Parliament on Monday (Nov 6).

Under this cap, individuals with annual income of less than $20,000 may borrow up to $3,000 from all moneylenders combined.

All other individuals may borrow up to six times their monthly income from all moneylenders combined.

Moneylenders cannot extend loans beyond this cap, and must obtain credit reports from the Moneylenders Credit Bureau (MLCB) to check if a borrower has exceeded the cap before issuing a loan.

The reports can be obtained online through the system for 50 cents. After dispensing the loan, moneylenders will have to update the MLCB, which was set up in 2015.

The Bill will establish a regulatory framework for the MLCB to impose rules on operators to protect borrower data.

It will also enable the Registrar to issue directions to the MLCB to enforce the the Act.

The Bill will also provide the Registry of Moneylenders with more enforcement powers, to improve regulation of the industry.

Moneylenders must get the Registrar's approval before employing or engaging any assistants.

They must also seek approval before anyone can become a substantial shareholder of a moneylender, or increase substantial shareholdings in a moneylender.

The Registrar may cancel approvals for assistants and substantial shareholders to exclude "unsavoury characters" from the industry, such as those with previous convictions in unlicensed moneylending.

Moneylenders will also be required to incorporate as companies and submit annual audited accounts to the Registry of Moneylenders, in a move to professionalise the industry and improve their transparency and accountability.

To date, more than two-thirds of the 160 licensed moneylenders have already registered as companies.

The Law Ministry also tabled the Supreme Court of Judicature (Amendment) Bill on Monday. The proposed new laws will, among other things, make clear that the Singapore International Commercial Court (SICC) has jurisdiction to hear any proceedings relating to international commercial arbitration that the High Court may hear.

At present, there is no explicit mention that the SICC has such jurisdiction, and the amendment will clarify "beyond doubt" that the SICC, as a division of the High Court, can also hear matters relating to the International Arbitration Act.