New advisory committee to review Singapore's moneylending regime

SINGAPORE - The measures they will look at include capping interest rates for moneylenders' loans, capping the total amount of such loans made to each borrower and restricting moneylenders' fees.

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This is the statement released by the Ministry of Law today:

ADVISORY COMMITTEE ON MONEYLENDING TO PROVIDE RECOMMENDATIONS ON REGULATORY REGIME

The Ministry of Law (MinLaw) has formed an advisory committee on moneylending to review the moneylending regulatory regime and recommend suitable measures to strengthen the framework.

The 15-member committee is chaired by Mr Manu Bhaskaran, Director of Centennial Group International and Vice President of the Economics Society of Singapore, and includes representatives from the moneylending industry as well as voluntary welfare organisations which help distressed borrowers.

The committee will review the existing framework and make its recommendations on measures for:

- Capping of interest rates for moneylending loans;

- Restricting the charging of fees by moneylenders;

- Capping the aggregate amount of moneylending loans taken out by each borrower; and

- Other policy parameters which could strengthen the moneylending regulatory regime.

Dr Beh Swan Gin, Permanent Secretary, MinLaw said, "We look forward to the advice and recommendations from the committee in reviewing the regulations on the moneylending industry. It is not an easy task to maintain the balance between protecting consumers and preserving their access to credit."

Chairman of the Advisory Committee on Moneylending, Mr Manu Bhaskaran, said, "We hope that, with the diversity of representation in the committee, we can provide a holistic perspective on the measures necessary to strengthen the moneylending regulatory regime. We look forward to discussions with representatives from relevant groups in the coming meetings."

The committee will begin work on 25 June 2014 with a view to complete their consultation and submit recommendations to MinLaw later this year.

Background

During the Committee of Supply Debate 2014, Senior Minister of State for Education and Law, Ms Indranee Rajah, noted concerns raised by Members of Parliament over the moneylending landscape in Singapore, particularly excessive borrowing and excessive borrowing costs.

Ms Indranee mentioned that MinLaw intended to consult key industry stakeholders, including organisations that provide counselling to distressed borrowers and the moneylending industry, amongst others as part of the review on the moneylending industry. She highlighted the importance of striking the right balance between giving adequate consumer protection to borrowers and preserving their access to credit.