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Advisory panel set up to review moneylending regulations

AMID calls for tighter controls on licensed moneylending and complaints of excessive borrowing and exorbitant interest rates, the Law Ministry has brought together an advisory committee to review regulations for the industry and recommend improvements.

Dr Beh Swan Gin, the ministry's Permanent Secretary, said of the 15-member panel's challenge yesterday: "It is not an easy task to maintain the balance between protecting consumers and preserving their access to credit."

The committee will be looking at restricting the total amount a person can borrow, as well as capping interest rates.

Existing regulations limit only the sum a person can borrow from each moneylender. And these caps apply only to borrowers who earn less than $120,000 a year and seek unsecured credit - which is not backed up by property or other collateral.

Interest rate caps apply only to borrowers earning less than $30,000 a year.

The Straits Times understands that the authorities are looking to set up a Moneylenders Credit Bureau, which moneylenders must use to run compulsory credit checks on potential borrowers.

The committee will also look into restricting fees charged by moneylenders, who may now impose charges each time a loan or interest payment arrives late, or even when the money is returned early.

17 things debt-free, financially happy people do
  • Debt-free people keep close track of personal finances. They monitor how much they earn, how much they save and how much they invest.
  • Those without debt live on less than they make. This, in turn, enables them to put money aside for buying a house, retirement or emergencies.
  • Debt-free people think twice before buying something, which allows them to make smarter decisions. Long-term thinking about spending can also prevent impulse purchases.
  • To get rid of debt, ask for help whether it is lower interest rates or forgiveness for late payment. If you know someone who has met a financial milestone you admire, don't be afraid to ask how.
  • Another common trait debt-free people have is saving money. Make it a habit to put some money into the bank account on a regular basis, just like you pay the rent every month. Adding even small amounts will give you more financial freedom later.
  • Setting a specific goal for saving money is also important as this helps you know what you are striving for.
  • You should learn how to say no to avoid sitting on a mountain of debt. Saying no to smaller expenses can add up to big savings. Host a potluck dinner instead of eating out at posh restaurant.
  • To free yourself from debt, value experiences more than snatching stuff only to catch up with the latest trend. Think about whether you would be better off working late and buying stuff by sacrificing valuable time with your family.
  • Financially-independent people plan each step carefully. They also tackle the problems along the way rationally and systematically before moving on to the next step in their game plan.
  • Financial freedom comes to those who know their limits, and choose not to overspend on things they cannot afford. They avoid debt at all costs and ensure they always have enough money for their long-term financial plan at the end of the month.
  • Not only do they ensure all their credit debts are paid for on time, financially happy people also refrain from spending on credit at all.
  • One can be rich one day and bankrupt the next.
Financial problems can occur overnight and debt-free people are aware of it. To prevent themselves from sinking into quick sand when troubles arise, they plan for unforeseen circumstances with savings, insurance and other cash reserves.
<br>This way, they can also have peace of mind over their financial situation as they know they are always prepared for a crisis to hit.
  • Greed can be a dangerous thing, especially if it causes you to aim for greater fortunes in spite of what you already have. <br><br> Financially-happy people count their blessings and don't complain about not having more.
  • Rational shopping is hard for many people who are not financially happy. When you have clear financial goals in mind, you will be less likely to spend on impulse.
  • Before signing up for a loan, deal or purchase, financially savvy people read up on all the alternatives and consequences of the contract first. By doing this, they ensure they get the best deal there is and mimimise their debt risk.
  • Although life might not turn out exactly the way you planned, planning for your retirement ensures you have enough for the later years.<br><br>
Retirement planning needs to start as early as possible so you can work towards your goals one step at a time.
  • Financially-free people are not put down by setbacks. By being optimistic, they manage to plan rationally to find their way out of every financially-trying situation.

The authorities have stopped issuing new licences to moneylenders since 2012. That year, there were more than 200 licensed moneylenders here.

Although moneylenders give out less than 1 per cent of consumer loans, several MPs have called for tougher regulations in recent months, highlighting concerns over excessive borrowing and punitive interest rates.

In March, Pasir Ris-Punggol GRC MP Zainal Sapari cited the example of a security guard who had to repay $2,240, five weeks after taking out a loan of $1,600 - an interest rate of 40 per cent.

Yesterday, he said he hopes the committee will also look into restricting the number of moneylenders operating in any one area, and at better ways to educate borrowers.

The committee, which starts work next Wednesday, is chaired by Mr Manu Bhaskaran, director of strategic and policy advisory firm Centennial Group International, and vice-president of the Economics Society of Singapore.

It will submit its recommendations to the ministry by the end of the year.

Besides academics and representatives from the moneylending industry, such as Moneylenders Association of Singapore president David Poh, the group also comprises voices from voluntary welfare organisations that help distressed borrowers.

These include Credit Counselling Singapore president Kuo How Nam, and Mr Christopher Chuah, president of One Hope Centre's executive committee.


Get the full story from The Straits Times.

Did you know?

  • Moneylenders in Singapore give out less than 1 per cent of consumer loans
  • Existing regulations limit only the sum a person can borrow from each moneylender. These caps apply only to borrowers who earn less than $120,000 a year and seek unsecured credit.
  • Interest rate caps apply only to borrowers earning less than $30,000 a year.

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