After the recent case of harassment from debt collectors at a food court, there has been much talk about the governing of licensed moneylenders in Singapore. Now, rules are being reviewed and tightened, so as to better protect borrowers, especially those who come from lower income backgrounds.
The Moneylenders Act is now amended so that the Registry of Moneylenders have greater enforcement powers, which in turn helps in safeguarding borrower’s information from unlicensed moneylenders. Now, the registry can engage any person to help conduct frequent and stringent enforcement checks on moneylenders. Sharing information on borrowers with unlicensed moneylenders is now against the law.
Some other changes to the act includes mandating the use of Effective Interest Rate instead of the current Nominal Interest Rate for loans. Effective Interest Rate takes into account the compounding effect of the frequency of instalments. This means that the actual cost of borrowing is made more transparent and easy to see.
The last amendment to the Act was in 2008 but ever since, the moneylending landscape has changed and grown so much. These changes is timely and some may perhaps even find it overdue.
Changes to the Act affects about 243 licensed moneylenders in Singapore and will take effect from June onwards, giving the industry some leeway to adjust to the amendments.