Found yourself in a financial emergency situation?
You have several options to consider to obtain the financial assistance you need. For one, you can apply from banks. But these financial institutions are usually very meticulous and it’ll take a few days or weeks before your loan is approved. Another option is to borrow from accredited moneylenders.
Unfortunately, not all moneylenders are cut from the same cloth. You need to know about the Singapore Moneylending Act to make sure you’re engaging with a credible, licensed money lender. Read on to know more about the Moneylending Act. And how it can help you avoid troubling situations later on.
How the Moneylenders Act Regulate Moneylenders
The Moneylenders Act defined “moneylenders” as a person who, whether as the principal lender or agent, carries on the business of moneylending.
The Act makes sure that the lender has a:
According to this Act, no person should carry on the business of moneylending in Singapore unless he is:
- Excluded moneylender
- An exempt moneylender
The license application must be made in such form and manner determined by the Registrar. The moneylender must also pay for the non-refundable application fee. Lastly, the Registrar of moneylenders may issue a license with or without conditions.
The Registrar may also refuse to issue one. Here are some of the reasons why:
- The information or statement provided by the applicant is incomplete, false, or misleading.
- If the applicant fails to satisfy the requirements of the class or description of the license applied for.
- If the applicant fails to place with the Account General a security deposit of $20,000 for every place of business. This is to ensure the proper conduct of the moneylending agency.
Once the Registrar issues the license, it is valid for 12 months. Additionally, the Registrar may revoke or suspend the license or impose new conditions.
The Registrar will publish a list of all licensed money lending businesses. They will also provide a list of persons granted an exemption by the Minister under section 35.
Operating without a license is illegal and punishable with a fine. The licensed lender must be included and published in the official list of Licensed Moneylenders on MinLaw’s website.
Place of business, signage at the place of business, and a business name
A licensed moneylending agency must have an office. So before they can start operating, they must first apply in writing to the Registrar to approve their location. The Registrar may approve the application with or without conditions. He may also deny it.
Additionally, every moneylending agency must install signage. Here are some of the conditions that must be met:
- The signage must be easily seen in each of the lender’s places of business
- It must be visible to any person outside the establishment
- The sign must bear the business name. It must also have the words “Licensed Moneylender” in the English language
Those who fail to follow these rules shall be guilty of an offense. They will be convicted to a fine not exceeding $5,000.
Lastly, the moneylending agency is not allowed to change its business name without approval. They must obtain the written approval of the Registrar. Failing to do so will lead to a fine not exceeding $20,000.
Information of people in the management
The money lender must obtain written approval of the Registrar before employing or engaging any assistant. That said, they must:
- Specify the names and details of every assistant who the agency employs
- Provide written notice to the Registrar when a person is no longer employed or engaged by the money lending agency. The written notice must be provided not later than 7 days after the cessation
The Registrar may refuse to approve any person who:
- Has been convicted of any offense involving dishonesty or moral turpitude
- Has been convicted of any offense involving corruption, drug trafficking, and other serious crimes
- Has broken any provision of the Moneylending Act
- Has carried on any business of moneylending in Singapore or another foreign country
This is to make sure that shareholders, directors, and other parts of the management possess good character.
Accredited moneylenders are permitted to market or advertise their services on the following channels:
- Business or consumer directories – in print or online media
- The moneylender’s official website
- Advertisements placed within or on the exterior of the moneylender’s premises
All other channels are prohibited.
So if you receive an SMS, emails, or other forms of advertisements that are not allowed under the Act, these are from an unlicensed moneylender. Or from licensed lenders who are violating the rules.
Additionally, the moneylenders are prohibited from publishing any advertising material that contains false or misleading information. The advertisement is also considered false or misleading if:
- It doesn’t state the moneylender’s name.
- Or if the name is listed in a discreet manner.
- It fails to state the rate of interest and the actual rate charged yearly.
- It states the interest rate but actually charges a higher rate.
- The moneylender offers loans at a specified interest rate without disclosing that conditions apply.
Terms and conditions
The Act also states that any lending agency must clearly explain the terms of a loan to the borrower. It should be in a language the borrower understands.
All these should be in writing, including:
- Interest rate charged
- Late interest charges
- Other permitted fees
- Installment payment details for a term loan
Additionally, the applicant or his agent must acknowledge in writing that they have been informed of the terms and conditions of the loan. Lastly, the licensed moneylending agency needs to provide a copy of the loan contract.
That said, before signing any loan document, make sure you fully understand the terms and conditions. You are encouraged to ask questions and seek clarifications. This includes the repayment schedule, the interest rate charged, and the fees involved. Don’t rely solely on the advertisements from the lending agency.
Capped interest rate per month and loanable amount
Licensed money lenders must explain the maximum loan amount, the interest rate charged, and the late interest fee to the borrower.
According to the Act, for secured loans, you can obtain a loan of any amount. But for an unsecured loan, take a look at the table below:
Borrower’s Yearly Income
Singapore Citizens and Permanent Residents
Foreigners residing in Singapore
Less than $10,000
At least $10,000 and less than $20,000
At least $20,000
6 times their monthly income
6 times their monthly income
Effective last October 1, 2015, the maximum interest rate that licensed lenders can charge is 4% per month. This cap applies regardless of a person’s income.
If the borrower fails to make repayments on time, the maximum rate of late interest charge is 4% per month the loan is repaid late.
Do licensed lenders charge extra fees?
All moneylenders are allowed to impose the following fees:
- Late repayment fee not exceeding $60
- Approval fee not exceeding 10% of the principal of the loan
- In case of loan recovery, they will also charge legal costs offered by the court for a successful claim by the lender
Statements of account, loan documents, and receipts after granting a loan
Upon application and payment of a processing fee of $10, the licensed money lender must provide the borrower the following documents:
- Statement of account. This document must contain the details of the loan.
- A copy of any document related to the loan. This includes a contract for the loan granted or any guarantee or security deposit given for the loan.
Additionally, a receipt must be issued immediately if the licensed lender received any cash from or on behalf of the borrower. The receipt must be in the English language. And it must contain the following details:
- Name of the lending agency
- Address of the business
- Telephone number
- The amount paid and the date of payment
On the money lender’s copy of the receipt, they must obtain the borrower’s signature. This is to acknowledge that they have received the receipt.
That said, when you engage with a licensed lending agency, you must make sure that:
- The lender issues a receipt every time repayments have been made
- You receive a statement of your loan account at least once every January and July
- Lastly, keep all these documents as evidence of payments
The behavior of the moneylender
Accredited moneylenders are not allowed to:
- Harass or use abusive language against the borrower
- Ask for the borrower’s SingPass user ID and/or password
- Keep the borrower’s NRIC card or any other personal ID documents
- Grant a loan without providing a copy of the loan document
- Ask you to sign a blank or incomplete loan contract
- Approve a loan over the phone, SMS, or email before receiving the borrower’s loan application form and supporting documents
- Withhold part of the principal loan amount for any reason
If you encounter any of these situations, immediately report the money lender to the Registry of Moneylenders. Provide the necessary details, including the business name, license, and contact numbers.
Security and integrity data of the borrower
The lender must protect any borrower information. They must have proper security measures to prevent unauthorized access, collection, modification, or similar risks.
Additionally, a borrower may also request a correction on any error or omission in the borrower’s information. When a request is made, the lender must:
- Inform the Registrar as well as the designated credit bureau of the request.
- Conduct and complete an investigation. This is to ensure the integrity of the borrower’s information.
Unlicensed moneylending is when an unlicensed individual or business lends money to another individual. These loan sharks are known to use harassment methods to chase debt.
To prevent such practices, the Registrar has the power to inspect and require information or documents. Additionally, the Police may at all times enter the premises of any licensed money lender. They can inspect or seize any book, record, or other document relating to any moneylending transaction without a warrant being issued.
The prosecutor also has the power to order an inspection of customer information. Any individual who breaks or assists in breaking the law will be guilty of an offense.
- In the case where the person involved is a body corporate, they will be convicted and punished with a fine of not less than $50,000 and not more than $500,000.
In any other case:
- Punished with a fine of not less than $30,000 and not more than $300,000. And will be imprisoned for not more than 4 years.
- In the case of a second or subsequent offense, the individual will be punished with a fine of not less than $30,000 and not more than $300,000. And will be imprisoned for not more than 7 years.
If you encounter an unlicensed moneylender, immediately contact the Registry at 1800-2255-529. Then lodge a complaint or submit your complaint online.
Deciding to seek financial assistance is a huge decision. So if you want to apply for a loan, be sure to keep these things in mind. Do your due diligence and verify the credibility of the moneylending agency. Lastly, equip yourself with the necessary knowledge regarding the Moneylending Act.
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