Licensed Money Lender in Singapore
Licensed Money Lender in SingaporeThe role of licensed money lender in Singapore evolved significantly over the years. From the sudden increase of licensed money lender in 2010 to visible presence of licensed money lender in the neighborhoods in 2012-13. The tightening of measures on licensed money lender in 2015 and today’s reduced voices and mentions on licensed money lender.
The Early Days of ‘Ah longs’In fact, licensed money lender exist way back in the 90s and early 2000s but very few operates like the scale of today. In the early days of 70s-90s a lots of illegal money lending activities were going on and causing social issues.
The government passed strict laws to clamp down on illegal lending activities with a huge success. However, many illegal money lenders still operates in discrete and behind the scene.
That is when the government decided to opens up the money lending industry with increase number of licensee in the late 2000s. This is to ensure there are legal source of finance options available to the people in need of cash assistance and discourage people from borrowing with the illegal money lenders.
This legal entity of finance loans provides low income earner the option instead of turning to illegal lending when being rejected by banks.
Increase Numbers of Licensed Money Lender
Singapore suddenly saw a significant increase in the number of licensed money lender from the late 2000s to 2012. This rapid growth started to gain traction and concern among the people if this is the right move by the government.
However, statistics did suggest a drop in the illegal money lending related activities during this period. Suggesting that the objective is met in controlling the illegal money lending means with legal options now readily available.
With the increase of licensed money lender in Singapore as begin to see visible marketing activities around loans products offer by these legal lenders. There was even a point where some resort to sending SMS marketing messages direct to consumers and advertising directly on papers and online. This soon came to the attention of the authority with an increase of the share of voice on social issues resulted. To curb the ripple efforts of over borrowing and dangerous influence of easy credits from these marketing activities. The government ban all marketing activities such as SMS, cold calls, online and newspaper ads by all licensed money lender.
Therefore, if you ever receive an SMS or call regarding money lending, it must be illegal. Usually, these illegal money lender may impose themselves as the legal licensed money lender by using their brand names. Simply ignore and do not believe them.
Growing Numbers in the Neighborhoods
Between 2012-2013, there is a sudden increase in the number of licensed money lender within the neighborhoods towns. There were even a point where 7 to 8 licensed money lenders are visible setting up shops in mature town estate such as Toa Payoh, Jurong, Clementi and Bedok. This again caused trending talking points online and in the coffee-shops on the potential negative impact of such occurrences.
Again, this was heavily debated in the parliament where a numbers of MPs raised their concerns. Government then went on to ensure that measures and controls will be implement to limit the potential impact of license money lender within the neighborhoods.
Paradigm Shift in 2015
Given all the history above, things started to change for the better in late 2014 onwards. And in 2015, we see the biggest changes impacting the industry and all for a good reason to better protect consumer and business.
On June 2015, the New Unsecured Credit Limit changes phase in slowly and limit the unsecured debt limit to a maximum of 24 times the monthly income of borrower. This will subsequently reduce to 18 times and 12 times in June 2017 and 2019 respectively.
In October 2015, the 4% interest cap on all loans by licensed money lender is enforced. This is probably the biggest change to protect the consumers from exceptional high interest rate which is unserviceable. In addition, MinLaw also simplified moneylending rules and passed the following recommendations such as a maximum fee of SGD$60 for late payment and 10% administrative charge on the loan granted is allow.
In March 2016, the Moneylenders Credit Bureau is setup and in operation to aid the licensed money lender from risk of lending to someone who may likely to default. Data bank on loans and repayment records are now maintained in a centralize platform and information are shared across licensed money lender. This will help them reduce business risk with their assessment of loan applicants and at the same time prevent borrowers from borrowing beyond their capabilities to service.
Conclusion
The licensed money lending industry have come a long way and survived many criticisms and laws enforcement. From over 300 licensees reduced to 170 licensees today shows the effort the Government is doing to protect consumers and help these truly in the business.
There isn’t a one size fit all solution and there is a legal role that licensed money lender do play. At the end of the day, borrowers are empowered to find out the details and ask questions before seeking a loan from licensed money lender. When being offered a lemon, do not hesitate to walk away!
To view more, click on Licensed Money Lender for more detail
Licensed Money Lender in SingaporeThe role of licensed money lender in Singapore evolved significantly over the years. From the sudden increase of licensed money lender in 2010 to visible presence of licensed money lender in the neighborhoods in 2012-13. The tightening of measures on licensed money lender in 2015 and today’s reduced voices and mentions on licensed money lender.
The Early Days of ‘Ah longs’In fact, licensed money lender exist way back in the 90s and early 2000s but very few operates like the scale of today. In the early days of 70s-90s a lots of illegal money lending activities were going on and causing social issues.
The government passed strict laws to clamp down on illegal lending activities with a huge success. However, many illegal money lenders still operates in discrete and behind the scene.
That is when the government decided to opens up the money lending industry with increase number of licensee in the late 2000s. This is to ensure there are legal source of finance options available to the people in need of cash assistance and discourage people from borrowing with the illegal money lenders.
This legal entity of finance loans provides low income earner the option instead of turning to illegal lending when being rejected by banks.
Increase Numbers of Licensed Money Lender
Singapore suddenly saw a significant increase in the number of licensed money lender from the late 2000s to 2012. This rapid growth started to gain traction and concern among the people if this is the right move by the government.
However, statistics did suggest a drop in the illegal money lending related activities during this period. Suggesting that the objective is met in controlling the illegal money lending means with legal options now readily available.
With the increase of licensed money lender in Singapore as begin to see visible marketing activities around loans products offer by these legal lenders. There was even a point where some resort to sending SMS marketing messages direct to consumers and advertising directly on papers and online. This soon came to the attention of the authority with an increase of the share of voice on social issues resulted. To curb the ripple efforts of over borrowing and dangerous influence of easy credits from these marketing activities. The government ban all marketing activities such as SMS, cold calls, online and newspaper ads by all licensed money lender.
Therefore, if you ever receive an SMS or call regarding money lending, it must be illegal. Usually, these illegal money lender may impose themselves as the legal licensed money lender by using their brand names. Simply ignore and do not believe them.
Growing Numbers in the Neighborhoods
Between 2012-2013, there is a sudden increase in the number of licensed money lender within the neighborhoods towns. There were even a point where 7 to 8 licensed money lenders are visible setting up shops in mature town estate such as Toa Payoh, Jurong, Clementi and Bedok. This again caused trending talking points online and in the coffee-shops on the potential negative impact of such occurrences.
Again, this was heavily debated in the parliament where a numbers of MPs raised their concerns. Government then went on to ensure that measures and controls will be implement to limit the potential impact of license money lender within the neighborhoods.
Paradigm Shift in 2015
Given all the history above, things started to change for the better in late 2014 onwards. And in 2015, we see the biggest changes impacting the industry and all for a good reason to better protect consumer and business.
On June 2015, the New Unsecured Credit Limit changes phase in slowly and limit the unsecured debt limit to a maximum of 24 times the monthly income of borrower. This will subsequently reduce to 18 times and 12 times in June 2017 and 2019 respectively.
In October 2015, the 4% interest cap on all loans by licensed money lender is enforced. This is probably the biggest change to protect the consumers from exceptional high interest rate which is unserviceable. In addition, MinLaw also simplified moneylending rules and passed the following recommendations such as a maximum fee of SGD$60 for late payment and 10% administrative charge on the loan granted is allow.
In March 2016, the Moneylenders Credit Bureau is setup and in operation to aid the licensed money lender from risk of lending to someone who may likely to default. Data bank on loans and repayment records are now maintained in a centralize platform and information are shared across licensed money lender. This will help them reduce business risk with their assessment of loan applicants and at the same time prevent borrowers from borrowing beyond their capabilities to service.
Conclusion
The licensed money lending industry have come a long way and survived many criticisms and laws enforcement. From over 300 licensees reduced to 170 licensees today shows the effort the Government is doing to protect consumers and help these truly in the business.
There isn’t a one size fit all solution and there is a legal role that licensed money lender do play. At the end of the day, borrowers are empowered to find out the details and ask questions before seeking a loan from licensed money lender. When being offered a lemon, do not hesitate to walk away!
To view more, click on Licensed Money Lender for more detail