Before granting loans, most financial institutions carry out background checks on a client to see if there is any reason to grant him or her a loan.
If one fulfils the criteria, one will be given the loan. All is well if the loan is paid back on time. However, some borrowers may be unable to pay off their debts, yet still insist on applying for new loans.
In such a situation, the family member of such an individual must know how to ban someone from money lender.
This article explains how you can ban an individual from accessing a loan.
How MLAS Offers Protection From Loans
The Ministry of Law enacted the first part of the Moneylenders (Amendment) Act 2018 on 30 Nov 2018 to offer stronger protection for borrowers and tighten the regulations of licensed money lenders.
The second phase of implementation began in the first quarter of 2019. It aimed to professionalise the moneylending business. These implementations collectively help to guarantee borrowers secure access to personal credit.
Thanks to the legislation, the Moneylender’s Association of Singapore (MLAS) has the jurisdiction of how licensed money lenders handle their business.
Accordingly, the new laws impose aggregate loan restrictions, limiting the amount of money a person can borrow from all licensed money lenders combined.
The following rules apply to Singaporeans, permanent residents, and foreigners residing in Singapore:
- The Act establishes a regulatory framework for the Moneylenders Credit Bureau (MLCB). The new framework requires the MLCB and licensed money lenders to enhance borrower data confidentiality, security, and integrity.
- It allows MLCB to operate more effectively as a central repository of moneylending data. In turn, money lenders will be able to make more informed and responsible lending choices.
- The guidelines also provide a self-exclusion framework. This will assist borrowers in regulating their borrowing behaviour besides taking part in debt relief programmes.
- Licensed money lenders are forbidden from lending to anyone who has filed for self-exclusion under the framework.
- To prevent unwanted characters from joining the money lending sector, each registered money lender will need the consent of the Registry of Moneylenders before employing or engaging any help in the business. A license is necessary before someone becomes a considerable shareholder in, or raises substantial shareholdings in, a licensed money lender.
- Any licensed money lender who enters a loan arrangement that exceeds regulatory interest and charge limitations is breaking the law.
- Legislative amendments made to professionalise the moneylending business were enacted in the first quarter of 2019. All registered money lenders will be required to establish limited liability companies with a minimum paid-up capital of $100,000. They must also file yearly audited accounts with the Registry of Moneylenders.
When To Ban Your Loved One From Taking A Loan
Lenders may provide various options to repay your loan if you can’t do so owing to financial difficulties or challenges. Bear in mind you are legally obliged to repay your loan.
If you have a loved one who keeps borrowing money from lenders, he or she has a problem and needs to be stopped.
That’s when you will need to know how to ban someone from money lender.
If you don’t do so, your loved one may resort to taking a loan from anyone, including loan sharks.
Documents Required To Ban Someone From Taking A Loan
As part of its commitment to social responsibility, the MLAS has included a function on its website that enables you to request that a person be banned from taking a loan from a money lender. This is called the Do Not Lend (DNL) directory.
You can make such requests via the MLAS website. You must send verification documents through the mail or email.
A fee of $50, payable to the “Moneylender’s Association of Singapore”, is required to process each request.
Here are the documents to prepare:
- A photocopy of the requesting person’s NRIC (front and back)
- Proof of relationship to the individual – for instance, a marriage certificate for a spouse or birth certificate for a child
- A $50 check made payable to the “Moneylender’s Association of Singapore”
- A cover letter describing why you want to add the individual to the DNL directory, along with your full name and contact information
What The MLCB Self-Exclusion Listing Is About And Who Can Apply
The MLCB self-exclusion listing is a service through which an individual can voluntarily exclude himself or herself from applying for unsecured personal loans from licensed money lenders.
The following groups can apply for the MLCB self-exclusion listing:
- Permanent residents (PRs)
- Foreign workers
- Foreign domestic workers
You will also need your Singpass. If you don’t have Singpass, you can allow another individual who already has a valid Singpass to register on your behalf.
The following items are necessary to complete the registration online:
- Completed self-exclusion listing application form
- Document showing your connection to the individual who is applying on your behalf
- Registration charge of $5
Fill up all the sections, including the one under “Authorisation to apply on behalf”.
After you have prepared all the paperwork above, the person authorised to complete the online registration can proceed.
For verification, this person must submit the required documents to the MLCB through the online registration procedure.
How To Register For A Self-Exclusion Listing
You can register for self-exclusion anytime using the MLCB website. You or a third party who is helping with the registration must have Singpass.
Note that the person you authorise to act on your behalf must submit the aforementioned documents.
Those with a Singpass must pay $3 to register for or withdraw from the self-exclusion listing.
An authorised person enrolling or withdrawing on behalf of a foreigner who does not have a Singpass will pay $5. Both prices include GST.
Note that the effect of exclusion will not be immediate for registrations made via a third party.
The MLCB will need to verify the supporting documents before informing you and the authorised person on the registration status via email. This means that you’ll wait for some time.
Effective Period Of Self-Exclusion
The self-exclusion will continue to be in force until it is either revoked or the minimum exclusion term ends, whichever comes first.
You will not be able to withdraw from self-exclusion for a minimum term of two years, depending on your citizenship status.
For Singaporeans or PRs, the minimum time required is one or two years. For non-citizens, it is two years.
Early withdrawal from the self-exclusion policy is not allowed. After the self-exclusion term ends, you may reapply for inclusion on the list.
How To Verify If You Have Been Excluded
You have the option to acquire a copy of your Loan Information Report from the MLCB. This report will include the current status of your self-exclusion listing and the minimum time required for the exclusion.
Your credit score will not be affected when you purchase a copy of your credit report from a credit agency.
Since it’s an inquiry that helps you determine your position as a borrower, it does not affect your credit score. It is essential to check on it regularly.
Every year, credit bureaus in Singapore will provide you with a complimentary copy of your MLCB report for you to view. They will get in touch with the bank or financial institution that gave the data. This guarantees licensed money lenders have accurate information on your past borrowing behaviour.
If you find any inaccuracies in the report, you are free to write to the Moneylenders Credit Bureau. Ensure you get a report from your money lender, particularly if you want to apply for credit.
Once you submit the request for correction, the MLCB will add a note to your credit report indicating that its inquiry into your data is ongoing.
This will reflect your credit history more accurately and make it easier for you to borrow an amount that is within your means to repay.
It also allows lenders to make informed judgments before they dole out loans, which is an integral part of the lending process.
Further Actions To Take
With the MLCB Loan Information Report, you will also be able to determine your credit score.
Your credit score counts as authorised money lenders rely on it to assess whether you are creditworthy.
If any changes are requested by you, the MLCB will send your corrected credit report to all financial institutions requesting information about you over the last three months.
In case of any fraudulent activity, you can file a complaint. It will investigate your situation and hold the money lender accountable for their actions, if applicable.
You have the option of bringing the matter before the Small Claims Tribunal if you believe that the money lender was involved in fraudulent activities.
Following the Consumer Protection Act, the court will only become involved if the value of the loan transactions warrants it.
If you want to find the best money lender, look up reviews left by customers on websites that can be trusted. Make sure that the lender has a solid reputation in the industry.
Know Your Limits When Borrowing
As you can see, there are various measures in place that protect borrowers and licensed money lenders in Singapore.
Now that you know how to ban someone from money lender, you can do so for a close friend, family member, or someone who has asked you to act on his or her behalf.
But if you need a loan, we are here to help. At licensed money lender U Credit, we strive to give you the best financial advice.