SINGAPORE - The Government today (Jan 26) took actions to curb abuses by licensed moneylenders that profit from making debts snowball or collecting frequent "administrative fees".
The Registry of Moneylenders, a department under the Ministry of Law, has issued a set of directions to all licensed moneylenders and said that the directions "are effective immediately".
The directions, which are a supplement to the Moneylenders Act and Rules, seek to stop lenders from "falsely informing borrowers that they can be granted only weekly loans under a 'new law'"; splitting a single loan into several components so that a late fee can be imposed on each component that borrowers are unable to repay on time; and offering short-term loans of less than a month in duration and making borrowers "repeatedly re-finance" that loan by paying an "administrative fee".
The Registry said in a statement that lenders are required to inform borrowers of the terms and conditions of the loan, including how interest and fees are computed and when they will be charged.
Lenders must also stop offering loans to borrowers "who are unlikely to be able to keep up with the repayment plans" and thus incur admin or late-payment fees. This is to prevent debts from snowballing, the Registry said.
It also said that all licensed moneylenders will be required to provide borrowers with a "cautionary statement in writing" before any loan can be granted.
Borrowers given "such loans" may lodge a complaint with the Registy of Moneylenders.