Police licence will reduce stigma, raise standards: Firms

Proposed rules to regulate debt collection activities could help reduce the stigma of collectors being associated with loan sharks and improve industry standards, said debt collection agencies.

Five firms told The Straits Times yesterday that they welcome the proposed rule of needing a police licence to operate as it would give the public more confidence in the way they work.

However, some raised concerns about having to seek police approval on staff hires as it could make recruitment more challenging.

A licensing and approval regime for debt collection firms and their employees was among the proposals released by the Ministry of Home Affairs on Wednesday.

Mr Israel Shankar Ganesh, deputy chief executive and head of legal at JMS Rogers Global, said the rules will help to change the impression that all debt collectors behave like loan sharks in recovering funds.

"There are black sheep in the industry who use improper means to recover funds, like hurling profanities or using violence, but not all of us are like that," he said.

Mr Ganesh said JMS Rogers contacts debtors first by calling or e-mailing them. If there is no reply, collectors will then visit the debtor at his home. Repeat visits are sometimes necessary if debtors are uncooperative.

Ms Lyn Ling, founder of Fast Debt Recovery, said her staff presents evidence, such as contracts, to persuade debtors to pay up.

"When a debtor and creditor have conflicting narratives, we try to arrange for them to meet and sort it out," she added.

There are currently no regulations that deal specifically with what debt collectors can or cannot do.

But errant collectors - such as those who inflict injury on debtors or vandalise public property - can be prosecuted by law.

Some firms said they are worried about having their applicants screened by the police, citing possible manpower issues.

Mr Winston Chin, director of KX-Unit and Associates, said that given the industry's high turnover rate, he might find himself short-handed if applications take too long to be processed.

Mr Samuel Pang, operations manager at DMS Group debt collection agency, noted that most of his debt collectors are part-timers and they might not be willing to wait to be approved before starting work.