The first phase of Moneylenders (Amendment) Act 2018 and Moneylenders (Amendment) Rules 2018, which was designed to provide better protection for borrowers and strengthen the regulation of licensed moneylenders, will be implemented starting from 30 November 2018.
The Ministry of Law (MinLaw) stated on last Friday that the second phase of implementation will take effect in the first quarter of 2019.
Together, these improvements to the moneylending regime will help to ensure that borrowers have safe access to personal credit, the ministry noted.
The ministry stated that the new rules will introduce aggregate loan caps to limit the amount an individual may borrow from all licensed moneylenders combined. As announced on 4 October 2018, the following caps will apply to Singapore Citizens and Permanent Residents, as well as foreigners residing in Singapore:
The ministry said that a regulatory framework has been introduced for the Moneylenders Credit Bureau (MLCB) to facilitate the implementation of the aggregate loan cap.
The new framework places obligations on the MLCB and licensed moneylenders to strengthen the confidentiality, security, and integrity of borrower data, which will better enable the MLCB to function as a central repository of moneylending data, and help moneylenders make more informed and responsible lending decisions.
It also said that the new rules also provide for a self-exclusion framework, to help borrowers regulate their borrowing behaviour and participate in debt assistance schemes which typically require self-exclusion. Under the framework, licensed moneylenders are prohibited from lending to any individual who has applied for self-exclusion. Implementation of the self-exclusion system is on-going; more details will be available in due course.
As to prevent undesirable characters from entering the moneylending industry, the ministry said that the approval of the Registrar of Moneylenders will be required before any licensed moneylender can employ or engage any assistant in the business. The Registrar’s approval will also be required before anyone can become a substantial shareholder of, or increase his substantial shareholdings in, a licensed moneylender.
In addition, it is now an offence for any licensed moneylender to enter into a loan contract that breaches regulatory caps on interest and fees.
The ministry states that legislative changes relating to the professionalisation of the moneylending industry will take effect in the first quarter of 2019. All licensed moneylenders will be required to be incorporated as companies limited by shares with a minimum amount of paid-up capital of $100,000, and to submit annual audited accounts to the Registry of Moneylenders.