Some licensed moneylenders as bad as loan sharks

Some licensed moneylenders as bad as loan sharks
A banner placed at a foodcourt stall in Funan DigitaLife Mall in January. Mr Lim Biow Chuan called for more protection for consumers.

The tactics licensed moneylenders use to harass debtors are sometimes no different from that employed by loan sharks, said Mr Lim Biow Chuan (Mountbatten) yesterday in Parliament.

Quoting the example of a resident whose son had borrowed heavily from a licensed moneylender, he said: "After his son ran away from home, my resident was left to face the wrath of the debt collector engaged by the licensed moneylender."

He pointed out how debt collectors would humiliate residents into paying, harassing them at odd hours of the night.

"We can do more to protect our consumers from illegal harassing tactics of debt collectors," said Mr Lim, who argued for more regulation of the industry.

Responding to Mr Lim's queries, Senior Minister of State for Law Indranee Rajah said debt collectors cannot contravene the law.

She noted that for harassing tactics, the new Protection from Harassment Act provided civil and criminal remedies for harassed individuals.

At least four anti-harassment orders have been issued against debt collectors since the Act came into force last November, said Ms Indranee.

"Borrowers who encounter criminal behaviour from licensed moneylenders or their debt collectors should report the matter to the police or the Registry of Moneylenders," she said.

Ms Indranee said that the Government is considering imposing caps on interest rates, late fees and other charges, and is also looking to set up a moneylenders credit bureau so those in the industry can run credit checks on potential borrowers.

The report from an advisory committee on moneylending, which was set up last June, had examined these issues and would make its recommendations soon, she said.

"Licensed moneylending removes the need to borrow from loan sharks, but we also need to regulate the industry strictly and carefully, to protect the vulnerable borrowers," she said.


This article was first published on March 11, 2015.
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