A businesswoman who borrowed $128,000 from a licensed moneylender has repaid nearly $212,000, but is facing legal demands from the credit company, which says she still owes about $136,000.
Ms Ang Ai Tee, 69, has gone to court to set aside the statutory demand - a precursor to bankruptcy proceedings - served on her by the moneylender, Resource Credit.
Her lawyer, Mr Lee Ee Yang, argued that the case concerns "egregious" acts by the moneylender to pressure his client into repeatedly renewing her loan. She had to pay a 10 per cent "administrative fee" each time she renewed the loan.
Out of the $211,856 that has been paid, $150,800 were for these administrative fees, which ballooned over the span of a year. The rest comprised interest, late interest and late fees.
Singapore's moneylending regulatory regime was strengthened in October 2015 to protect borrowers. Among other things, interest and late fees were capped at 4 per cent a month and moneylenders were allowed to charge an upfront administrative fee of no more than 10 per cent of the principal.
After the rules were implemented, moneylenders began offering short-term loans, charging borrowers administrative fees repeatedly to roll over the existing loan.
The Registry of Moneylenders issued directions last year and this year to denounce such practices.
In Ms Ang's case, she began borrowing sums of between $30,000 and $60,000 from Resource Credit from January 2015.
After the new rules kicked in, she said she was persuaded to take up another loan for $50,000, repayable the next day.
When she could not pay up, Mr Lee said she was pressured into "renewing" the loan, paying 13.92 per cent of the loan each time - 10 per cent in administrative fees for the "new" loan and interest of 3.92 per cent on the "old" loan.
Between October 2015 and September last year, she renewed the loan 16 times, out of which the principal was increased three times.
When she did not pay to renew the loan on October 2015, Resource Credit served a statutory demand on her. Ms Ang applied to set it aside. Her case was dismissed by a senior assistant registrar, and she then appealed to the High Court.
Mr Lee argued that administrative fees are not allowed under the Moneylenders Act. Hence, the money she paid as administrative fees should be set off against the outstanding principal and interest.
Resource Credit, represented by Mr Ting Chi Yen, argued that each of the loans was legally and properly granted. The moneylender's case is that the administrative fee represents its acceptance of risk for that month. So when a loan is refinanced for a fresh period of time, it takes on a fresh risk.
The court's decision is pending.