Most people don’t know much about Singapore’s Moneylenders Act and its new rules. And it’s completely okay, as some details can be pretty dull and complex for the general public.
But if you’re currently in need of some quick cash, you may be wondering how these licensed money lender new rules affect you.
Don’t worry. We have done the legwork for you and simplified everything you need to know about licensed money lender new rules in Singapore.
This blog post will break down the licensed money lenders act, its new rules, and how it’s meant to protect borrowers. Keep reading to find out.
What The New Moneylending Regulations Are About
The Ministry of Law implemented the first phase of the Moneylenders (Amendment) Act 2018 and Moneylenders (Amendment) Rules 2018 on 30 Nov 2018.
Here’s what these regulations cover:
- Introduction of aggregate loan caps to limit loan amounts
- Introduction of a regulatory framework for Moneylenders Credit Bureau (MLCB) to function as a central repository of data
- Provision of a self-exclusion framework so borrowers can regulate their borrowing behaviour and leverage debt assistance schemes
- Prevention of the engagement or employment of assistants and addition of shareholders without approval from the Registry of Moneylenders
These licensed money lender new rules aim to protect borrowers’ rights better and strongly regulate the operations of licensed money lenders.
The second phase of licensed money lender new rules was implemented in Q1 of 2019, and it further strengthened the regularisation of the moneylending industry.
These regulations concern the company status of licensed money lenders and the submission of audit reports to the Registry. These are explained below in detail.
Overall, both implementation phases proved substantial and ensured borrowers’ safe access to personal credit.
How Licensed Money Lender New Rules Protect Borrowers
Let’s see how these new rules protect borrowers.
Aggregate Loan Limits
First, the licensed money lender new rules introduced aggregate limits on the loan amounts an individual can borrow from all licensed money lenders.
Here’s what the borrowing limits are:
For Singaporeans or permanent residents
- If you earn less than $20,000 per year, you can get a loan of $3,000 (maximum)
- If you earn at least $20,000 or more in annual income, you can get a loan equalling six times your monthly salary
For foreigners residing in Singapore
- If you earn less than $10,000 per year, you can get a loan of $500 (maximum)
- If you earn more than $10,000 and less than $20,000 annually, you can get a loan of $3,000 (maximum)
- If you earn at least $20,000 or more in annual income, you can get a loan equalling six times your monthly salary
Remember, these limits apply to the sum of all loans.
For example, if you are eligible for a $3,000 loan, it doesn’t mean you can get $3,000 each from different money lenders.
Instead, you may get $1,500 from two money lenders; or $1,000 from three different licensed money lenders.
Regulatory Framework For MLCB
Secondly, the Ministry introduced a regulatory framework for the Moneylenders Credit Bureau to uphold the confidentiality and integrity of borrowers’ personal data.
This regulation will enable MLCB to act as moneylending’s data hub, helping licensed money lenders make responsible, data-driven decisions.
Borrowers’ Self-Exclusion Framework
Lastly, the licensed money lender new rules also introduced a self-exclusion framework for borrowers.
It allows them to self-analyse their borrowing behaviour and explore government loan schemes first before applying for a loan. This framework prevents licensed money lenders from giving out loans to people who have applied for self-exclusion.
This is how the new rules protect borrowers’ rights in Singapore.
Now, let’s see how these rules have strengthened the regulations for licensed money lenders in Singapore.
Strengthened Regulations For Licensed Money Lenders
Besides protecting borrowers’ rights, the Moneylenders Act’s new rules further enforce licensed money lenders’ regulations.
Regulation Concerning Assistants And Shareholders
First, the Registry of Moneylenders has placed strict restrictions on licensees hiring assistants or adding a substantial shareholder to their business. This means a licensed money lender can’t employ or engage an assistant before obtaining approval from the Registry.
The assistant to be engaged will be scrutinised, and background checked before getting hired. The Registry will reject the application if he’s found to be involved in any offence involving dishonesty, moral turpitude, corruption, drug trafficking, or other serious crimes.
Similarly, licensed money lenders will also need the Registry’s approval before someone can become their shareholder or increase his percentage of share in their business.
Strictly Following Interest And Fee Caps
Moreover, licensed money lenders found to be breaching the regulatory caps on interest and fees will bear serious consequences. They might get hefty fines or get their licence revoked.
Remember, a licensed money lender isn’t allowed to charge more than 4% per month as interest on the loan amount. Plus, they can only charge a one-time administrative fee of 10% of the principal loan amount upon loan approval.
You may report a licensed money lender to the authorities if it charges an additional fee or higher than a 4% interest rate.
Additional Measures To Professionalise The Moneylending Industry
The government has also taken additional measures to professionalise the moneylending industry in Singapore.
The Ministry announced a legislative change in this regard. From 29 Mar 2019, the new rule requires all licensed money lenders to register as companies limited by shares with at least $100,000 as paid-up capital.
This means two things:
- From now on, only companies can apply for a money lender’s license, not persons
- The company must have received $100,000 from shareholders in exchange for shares of stock
What good will it do?
The paid-up capital will ensure licensed money lenders have sufficient resources to lend money responsibly. It also protects the interest of shareholders should the company go bankrupt.
Other than that, the new rules of the Moneylenders Act also require licensed money lenders to submit annual audited accounts to the Registry of Moneylenders.
The audit report will help the Registry monitor the financial health of licensed money lenders and ensure that they’re adhering to the new rules.
This is a massive development for the moneylending industry in Singapore.
Moneylenders Act And Rules
To sum up, the new rules under the Moneylenders Act protect borrowers’ rights and enforce the regulations for licensed money lenders in Singapore.
Let’s have a quick recap of the licensed money lender new rules. The Moneylenders Act:
- Introduced aggregate limits on loan amounts an individual can borrow from all money lenders combined. The limits vary depending on a borrower’s annual income and residency status
- Implemented new regulatory rules for Moneylenders Credit Bureau to act as a central, secured data centre
- Prevents licensed money lenders from giving out loans to those who have applied for self-exclusion
- Places strict restrictions on licensees hiring assistants or adding a substantial shareholder to their business without approval
- Requires all licensed money lenders to be incorporated as companies limited by shares with at least $100,000 as paid-up capital
- Requires licensed money lenders to submit annual audited accounts to the Registry of Moneylenders
- Imposes hefty fines or license revocation for licensed money lenders found to be breaching the regulatory caps on interest and fees
Always Practice Safe Borrowing
The Singapore government and authorities always do their best to protect borrowers’ rights and interests. This is evident in the licensed money lender new rules.
But as a borrower, you should also do your part by borrowing safely and responsibly.
The first and most crucial aspect of borrowing is only reaching out to licensed money lenders. Such money lenders are regulated by the Ministry of Law and abide by the rules set under the Moneylenders Act.
Need a loan fast?
Loan officers at U Credit are always ready to assist you with your financial needs. We offer one of the fastest personal loans in Singapore and offer instant cash on the spot.
Contact us now or apply for a loan today.
