Debate over licensing debt collection

Licensing the debt-collection industry could clean up its image, and clamp down on the use of harassment tactics.

This suggestion by Mr David Poh, president of the Money- lender's Association of Singapore, has been backed by the Credit Collection Association of Singapore (CCAS).

But others in the industry have baulked at the idea, insisting that there are already laws to protect debtors from unfair tactics.

The industry has been in the spotlight since seven employees of Double Ace Associates were charged with unlawful assembly last month. They had confronted a stall owner who owed money at Funan DigitaLife Mall's foodcourt, and caused a stir by reportedly damaging items.

Debt collectors have also been known to go to homes at odd hours, bang on doors, shout obscenities and fax letters of demand to debtors' workplaces to shame them. Harassment of borrowers made up the bulk of complaints received by the Registry of Moneylenders over recent years. There were 95 such reports last year, 124 the year before and 100 in 2012.

Veteran lawyer Amolat Singh said making threats may amount to criminal intimidation, and constant badgering is harassment.

"But in general, the borrowers will not call the cops because they don't want to provoke the debt collectors further."

The matter was raised in Parliament last month when MP Foo Mee Har asked if debt collectors should abide by a code of conduct, and if the Government would consider instituting laws that govern fair debt-collection practices.

Mr Poh told The Straits Times that licensing debt collectors in the same way that moneylenders are licensed will weed out errant companies. Those who breach regulations can be suspended or have their licence taken away.

"Debt collectors have all sorts of tactics and some moneylenders who hire them don't care how they do it, they just want their money back," he said.

"Debt collectors should instead talk it over with the debtors and not act like hooligans."

Ms Chen Yew Nah, managing director of Datapool and president of CCAS, said: "Over- aggressive tactics... are counter to the professional practices of the members of CCAS."

The industry's first professional organisation was formed last November to counter the poor reputation that debt-collecting firms were earning. It has a code of ethics that requires its 12 members not to use "oppressive or intrusive collection procedures".

Members are also advised to be "circumspect and discreet" when attempting to contact the debtor, and "not to bring unreasonable pressure to bear on the debtor in default of payment".

But CCAS does not have much power to enforce the rules, and its 12 members represent just a small number of about 300 agencies currently operating.

Some in the industry, however, said there is no need for any licensing regime, pointing to the new Protection from Harassment Act, which came into force in November last year. They also defended some of their tactics.

A manager of a licensed moneylender, who wanted to be known only as Mr Tan, said: "There are people with little or no intention of returning the money they borrowed. We have to come up with certain measures to make them pay... But of course there should be a limit, like no violence."

Mr Samuel Pang, the operations manager of debt-collection firm DMS Group, said that for a few debtors, "if you use a very nice way of collecting and make it friendly, there's no way (the creditors) can recover the debt".

He is worried that tighter rules, such as restricting when collectors can visit debtors, will only embolden some borrowers to not pay up.

Mr Roger Rajan, who runs debt-collecting firm JMS Rogers, admits that his firm has faced allegations of harassment since it was formed in 2004. "Most of (the debtors) will go to the police alleging harassment... This is the only tool they have. Just to avoid payment, they will come up with all kinds of stories."

Meanwhile, MP Alvin Yeo, a member of the Government Parliamentary Committee for Home Affairs and Law, noted: "If there is a code of conduct, you need to also have a system put in place for people to complain about bad behaviour and to also investigate the complaints. It's quite a lot of infrastructure to put up.

"One way is to put the onus on the licensed moneylenders, to ensure that the debt collectors they use do not engage illegal or high-pressure tactics."

This article was first published on Mar 7, 2015.
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