Maids and foreign workers can ask employers to bar them from taking up loans from licensed moneylenders under a self-exclusion framework similar to the one in place to stop individuals from entering casinos.
The self-exclusion facility, which was launched yesterday, allows individuals or third parties to apply through the Moneylenders Credit Bureau.
The framework will stop licensed moneylenders from giving loans to Singapore citizens, permanent residents and foreign residents who are on this list.
Third parties, such as employers of maids or employment agencies, can apply for the exclusion on behalf of potential borrowers only if consent is given by the individuals themselves, the Ministry of Law said yesterday.
The framework is being launched following a spike in the number of foreigners taking licensed moneylenders' loans, which has risen over the last three years.
In the first half of this year, there were 53,000 foreign borrowers who took loans from licensed moneylenders, approaching the 55,000 foreign borrowers for the whole of last year. In 2017, there were 19,000 such borrowers, and 7,500 the year before.
The ministry also highlighted a surge in the number of foreign work pass holders acting as guarantors: from about 50 three years ago to about 6,000 last year.
Some work pass holders were found to have brokered or facilitated loan applications for fellow work pass holders in exchange for money.
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New rules for licensed loans to foreigners
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• Caps on the supply of unsecured loans to foreigners: A licensed moneylender may not lend to more than 300 foreigners or extend more than $150,000 in total principal loans to foreigners at any point in time. They also cannot grant loans to more than 15 foreign borrowers a month, and cannot lend money to more than 50 foreign borrowers a year.
• Licensed moneylenders cannot accept foreigners as guarantors: To prevent work pass holders becoming liable for the debt if borrowers default on a loan, licensed moneylenders will not be allowed to accept foreigners as guarantors.
• No targeted advertising at vulnerable groups: Licensed moneylenders will not be allowed to display advertisements such as "Domestic helpers are welcome". This will reduce the visibility of easy credit to vulnerable work pass holders.
• No loans to be facilitated by unauthorised third parties: Loans brokered or facilitated by unauthorised third parties without the requisite work permit or authorisation cannot be granted by licensed moneylenders. The Ministry of Manpower will also take action against work pass holders who broker or facilitate loans for gains.
• No cross-referral of borrowers between lenders: Licensed moneylenders cannot refer borrowers to other lenders. This is to protect vulnerable borrowers and prevent lenders from circumventing the new supply caps.
The changes announced include barring licensed moneylenders from accepting foreigners as guarantors and granting loans that have been facilitated or brokered by unauthorised third parties, starting today. Action will also be taken against work pass holders who engage in such activities.
Another change will reduce further the total amount that can be borrowed by low-income foreigners from all lenders, and will go into effect today.
In November last year, new loan caps were introduced where foreigners earning less than $10,000 annually were allowed to borrow only up to $1,500 from all licensed moneylenders combined.
But starting today, the cap will be lowered even further to $500 for foreigners in this income bracket.
Credit Association of Singapore president Peter Tan cautioned that the measures might steer borrowers to unlicensed lenders. He also took issue with the caps on the supply of loans to foreigners.
"There are foreigners who earn respectable salaries and can service their loans, so I don't think there should be a limit for the higher-income groups."
Employers such as Ms Julia Chan, 39, believe the moves will help prevent maids from borrowing beyond their means.
Last November, she discovered her helper had borrowed $800 from two licensed moneylenders.
Even after speaking to her maid about it, she found out that her helper continued to borrow from unlicensed lenders, and fired her last month.
For the human resource professional with four young children, her biggest concern was that her maid had used her home address to take out the loans.
She believes that it would be better if employers' consent is sought before licensed loans are given to maids so employers can monitor the situation.
