Who Regulates Moneylenders in Singapore?

The need for money has been extremely high these times. Thus, people seek solutions by getting loans from Singapore’s lenders. But who regulates moneylenders in Singapore?

It’s necessary to resolve money issues, especially as the country continues to move forward from restrictions and economic disfigurement. The inflation rate is still soaring, and the taxes are high. Yet, you can rely on moneylenders in the country to apply for loans. 

As Singapore is firm on its regulations and laws, it’s best to know and understand further the entity regulating moneylenders in Singapore. Find out the ordinances legal moneylenders must follow, the types of loans you may borrow from them, and the benefits accessible from the industry.

Let’s push forward to understand the laws on moneylending and know more about who manages moneylenders in Singapore. 

Moneylenders in Singapore

Moneylenders in Singapore have businesses that focus on lending money to their borrowers. They lend money to obtain a substantial return on investment through the interest rate they would demand from their clients. 

Aside from interest rates, moneylenders in Singapore may also stipulate other fees connected to the loan acquired from them. The individuals who have earned the title of moneylender in Singapore all have passed the licensure tests demanded by the government. 

The Moneylenders Act Section 5 explicitly states that only those who have attained their licence to operate, carry on, commit, and function to lend money in Singapore are authorised to do so.

The individuals or groups treated as genuine moneylenders in Singapore fall into three classifications: excluded, exempt, and licensed.

Excluded Moneylender

The excluded moneylenders in Singapore are individuals or groups with authority to lend money, particularly to specific bodies, such as limited liability partnerships, corporations, trustees or trustee-managers from a business, trustees for real estate investment and or those who are considered accredited investors. 

The most common and legitimate excluded moneylenders in Singapore are pawnbrokers under the regulations of the Pawnbrokers Act, also credit societies under the laws of the Co-operative Societies Act. 

Excluded moneylenders in Singapore may lend money to their employees. Companies include it in their employees’ benefits. This is advantageous because employees no longer have to endure different pressures when taking out a loan outside their companies. 

Exempt Moneylender

These businesses that offer financial moneylending services have acquired a licence to become exempt moneylenders. They are granted such exemption if they fall under the regulations of the Act sections 91 and 92.

Exempt moneylenders in Singapore must submit their applications to the Registrar and be approved with the full authorisation of the Moneylenders Act. 

To learn the businesses that applied for exemption, borrowers may refer to Singapore’s list of exempt moneylenders on the Registry of Moneylenders’ webpage.

Licensed Moneylender

These moneylenders in Singapore had to undergo and pass the Moneylender’s Test. However, a Test-Qualified Manager test is ordered to operate and manage moneylending in Singapore fully. All moneylenders in the country will be enlisted in the Registry of Moneylenders.

Licensed moneylenders in Singapore mainly provide personal or consumer loans to their borrowers. Unsecured credit is comprehensively more minor compared to secured credit. It is primarily because consumer loans do not demand collateral from their borrowers. 

Nonetheless, with the smaller loan accessible for borrowers, it guarantees a faster business cycle, plus higher interest rates attained by licensed moneylenders in Singapore. 

The primary functions of licensed moneylenders are similar to banks for proffering, processing, and granting loans to interested individuals. Late payments are dealt with through late interest rates and fees. 

All communities, business owners, and borrowers in the country have to follow particular regulations imposed by the government. It is to make sure that all legal advancements made in the future will be fair and just. Now, for moneylenders in Singapore, who administers the balance for them?

Who Regulates Moneylenders in Singapore?

Singapore is a familiar country for handling trade, commerce, and finance. In truth, the country was already an ace in these types of markets long before the modern age. 

The 1800s brought the banking and moneylending industry to Singapore via the introduction and influence of the Chettiars. They were called financiers and dominated the bank and moneylending in Singapore until the 1970s when homegrown banks became more prominent.

Even when moneylending was accessible to communities in Singapore back then, it was a business commonly associated with scamming, exceptionally high-interest rates, and illegal fee changes before the loan contract’s agreement. 

Due to the repetitive concerns around moneylenders in Singapore, the government’s Ministry of Law put forth the Moneylenders Act and Rules and set the Registry of Moneylenders to its course.  

The Registry of Moneylenders is the body that regulates moneylenders in Singapore. 

Regulates Moneylenders in Singapore on Loan Products

Legal moneylenders in Singapore offer a wide array of loan products. But, the law regulates moneylenders regarding these via specific loan caps and conditions.

Here are the types of loans moneylenders in Singapore do provide:

Personal Loans
A well-recognised and popular financial product in Singapore is personal loans. It’s an unsecured loan that is accessible flexibly to its borrowers. It’s flexible in a matter of the loan purpose.

Borrowers may take out a personal loan depending on their financial needs. These may include paying medical bills, renovating, covering wedding expenses, or debt consolidation.  

Payday Loans
Singapore’s most outstanding short-term loan is the payday loan. It’s the perfect choice to have access to immediate funds in the most urgent monetary situations. But, as these are short-term loans, you have to repay the borrowed money on your next salary.

Debt Consolidation Loans
Are you currently enduring massive monthly dues from multiple loans? Then you need to get debt consolidation loans to simplify your loan and turn it into a single payment. It’s effective in reducing your overall interest payments.

Business Loans 
For entrepreneurs and business owners in Singapore, business loans are meant for you! Do you need extra cash for business operations? A business loan can help you resolve the issue. It’s also useful for purchasing equipment, expanding business, and managing cash flow.

Loan Regulations in Singapore

All registered moneylenders must grant a personal loan to eligible applicants with complete documents. Borrowers should be 21 years old to apply for a loan from licensed moneylenders. The interest rate for personal loans is regulated at 1% to 4%, capped maximum per month.

To guarantee faster loan approval, borrowers should be employed or have a steady source of income. The credit score must be good to excellent. Furthermore, actual proof of documents like identification, residency, and minimum income requirements are also regulated.

Registry of Moneylenders in Singapore

The Registry of Moneylenders or ROM is the immediate body which oversees all entrees and guidelines for moneylenders in Singapore. 

Its role heavily contributes to the balance within the moneylending industry in the country and guarantees professional, safe, and fair administrative practices to moneylenders. 

When an applicant does become a licensed moneylender, the Registry of Moneylenders will encourage its business details to be enlisted. The Registry becomes the immediate source of legitimate and authorised licensed moneylenders who have earned their rightful mark in the moneylending industry.

Fundamentally, every group or individual engaged and invested to being an excluded, exempt, and licensed moneylender has to abide by the Registry’s preferred application, writing, approach, and manner.

Regulates Moneylenders in Singapore Enforcement

Among the ROM’s obligations to the industry is to assess the moneylender’s qualifications and eligibility for their essential role in moneylending in Singapore. Ultimately, the Registry of Moneylenders will evaluate if an applicant deserves to get or to have issued or revoked their licences. 

To further distinguish the legal commitment and accountability of the Registry of Moneylenders in Singapore, I’ll particularise the relevant laws and regulations required to enforce.  As a result, the RoM regulates moneylenders in Singapore as efficiently as possible.

The Moneylenders Act 2008

Even though moneylending in Singapore has been active for decades, the legislation to improve its reputation took a while. The Ministry of Law proposed the Moneylenders Act in 1936 and modelled it from the English Moneylenders Acts of 1900 and 1927.

Although influential, the opinion on moneylenders in Singapore back then was riddled with dread among the communities. Thus, MinLaw initiated the Act’s enactment to improve the reputation of moneylenders in Singapore. In addition to this, it is to extend safety and security to borrowers and moneylenders.

The Moneylenders Act actively regulates moneylenders in Singapore today.

From the Moneylenders Act, the Registry accomplishes an effective legal structure with transparency regarding;

  • Issuance and revocation of licences
  • Approval of places of business
  • Approval and notification of change of profile
  • Publication
  • Unlicensed moneylending
  • Further offences 
  • Regulations on moneylending business, enforcement and proceedings
  • Miscellaneous comprising seizable and non-bailable, court jurisdiction, examination of offenders, exemption on application, class exemption, etc.

The Moneylenders Rules

The Moneylenders Rules 2009 extends the regulations associated with moneylenders and moneylending in Singapore under the Moneylenders Act.  The Rules comprise the directives on;

  • The licensing process for moneylenders notably excluded, exempted, and licensed moneylenders
  • Business regulations for moneylending in Singapore
  • Unsecured loans
  • Miscellaneous provisions

Regulates Moneylenders on Money Laundering and Financing of Terrorism Rules 2009

Another extension of the Moneylenders Act under the Registry laws is for the Prevention of Money Laundering and Financing of Terrorism. It came into the entire operation on March 1st, 2009.

It is a directive that will apply to all moneylenders in Singapore who grant secured and unsecured loans to the communities in the country. The general principles encompass a moneylender’s diligence to comply with the Rules when;

  • Associating with borrowers, agents, or beneficial owners of a borrower.
  • Conducting their moneylending businesses in specific manners and steer clear from activities in connection with money laundering or financing terrorism.
  • Assisting and cooperating with the enforced relevant laws to detect and prevent money laundering and financing terrorism. 

Additional scopes revolve around risk assessments, group policies, internal policies, procedures, controls, customer screening, CDD measures, suspicious transaction reporting, personal data, etc.

Moneylenders Breaching the Registry of Moneylenders

Until today, unlicensed moneylenders or Ah Longs act like loan sharks and put the general public in Singapore in great danger. In many cases, they often target foreign nationals working in the country with considerably lower income than most. 

Communities must report or file complaints when a moneylender in Singapore intentionally breaches the RoM laws and regulations. 

How do they break the laws and regulations of RoM?

  • Advertise or sends SMS regarding their moneylending services on platforms prohibited by the Registry.
  • Enticing borrowers with false and misleading information on loans.
  • Unsolicited invitations to take loans or to grant loans despite the disinterest of the target.
  • Doesn’t fully explain the loan terms and conditions in the language the borrower understands well.
  • Imposes more than a 4% interest rate on the borrower’s loan.
  • Demands a higher late interest rate when it should be 4% only monthly, and late fees at $60 per month. 
  • Doesn’t issue receipts for existing loan repayments.
  • Issues more than 10% of the one-time administrative fee.
  • Doesn’t follow the maximum loan cap for communities in Singapore based on annual income.

Singapore Citizens and Permanent Residents of less than $10,000 annually receive $3,000, while foreigners in Singapore get $500. The general public, with at least $10,000 to a maximum of $20,000 yearly income, will acquire $3,000. And individuals residing in Singapore with at least a $20,000 annual wage can obtain six times their monthly income. 

Regulates Moneylenders Accordingly by Law

The Registry shall enforce its full power against abusive and manipulative unlicensed moneylenders via the following;

  • Imprisonment period not less than four years and up
  • Caning up to six strokes
  • Hefty penalties from $5,000, $30,000, up to $450,000 or more, depending on the severity of their illegal moneylending activities to their victims

The Registry of Moneylenders does not tolerate unlawful moneylending activities in the country. Thus, it won’t hesitate to enforce its laws and regulations to assist, protect, and improve the experiences of borrowers and moneylenders in Singapore.

Nonetheless, RoM requires the participation and commitment of communities in Singapore to diminish or halt loan shark schemes ultimately. As a result, for unfavourable experiences due to moneylending transactions, one should call the Registry at 1800-2255-529, ‘999’ for the Singapore Police Force, or the X-Ah Long hotline at 1800-924-5664.

There’s nothing better than having a loan transaction with an organised and regulated licensed lender. So, click here to apply for a loan from a reliable moneylender in Singapore today!

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