Timely update for moneylending rules
By Lim Wei Chean
EVEN as Parliament approved a new Moneylenders Act yesterday, MP Ellen Lee wondered if the timing was right, given the current credit crunch as it could prompt more people to seek loans.
But Senior Minister of State (Law and Home Affairs) Ho Peng Kee gave his assurance during the debate that regulations were being tightened.
The new law eased some existing restrictions on advertising, methods of loan disbursements and collection of payments, as well as interest rates.
It also expands powers of the Registry of Moneylenders, giving it the ability to refuse, revoke or suspend a licence.
Borrowers also get greater protection. New rules require moneylenders to make terms and conditions known upfront, have loan contracts and explain these to borrowers in a language they understand.
They must also ask borrowers about other loans they have - a requirement which ensures borrowers do not over-extend themselves by taking multiple loans.
Penalties against harassment by loansharks now also extend to cover not just those involved in the act of harassment, but to those who instigate them to act.
Associate Professor Ho said the changes to the Act, which was enacted over 50 years ago, aim to place the industry on a firm and modern setting and ensure that moneylenders conduct themselves in a fair and transparent manner.
MPs Ellen Lee (Sembawang GRC) and Fatimah Lateef (Marine Parade GRC) supported the changes but asked about the impact on the industry.
They also wanted to know how the authorities would ensure moneylenders did not take advantage of borrowers, and how illegal moneylending or loanshark activities would be dealt with.
On Ms Lee’s concern that people might let their guard down and borrow blindly because of the credit crunch, Prof Ho said that in such times, licensed moneylenders would also be more risk-averse and cautious in lending.
And while advertising rules have been relaxed, this did not mean an easing-up on the industry. Restrictions do apply.
Moneylenders cannot place advertisements or material which are false or misleading, or which induce people to borrow for ‘inappropriate purposes’.
On harassment , he said moves like extending caning to those who instigate such acts are aimed at tackling the ‘ loansharking scourge’.
Source : Straits Times - 19 Nov 2008
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