Registry of Moneylenders Takes Action to Address Abuses by Licensed Moneylenders
26 JAN 2016
26 Jan 2016 Posted in Press releases
- The Registry of Moneylenders today issued a set of Directions aimed at curbing abuses relating to short-term and split loans. The Directions have been issued to all licensed moneylenders and are effective immediately.
- Through the Directions, which serve as a supplement to the Moneylenders Act and Rules, the Registry seeks to address the following three practices:
- Falsely informing borrowers that they can be granted only weekly loans under a “new law”;
- Splitting a single loan into several components (“split loans”), such that a late fee of $60 can be imposed on each component that borrowers are unable to repay on time; and
- Offering short-term loans of less than one month in duration, which borrowers have to repeatedly re-finance by paying an administrative fee.
- Under the Moneylenders Act and Rules, licensed moneylenders are required to inform borrowers of the terms and conditions of the loan. This includes information on how interest and fees are computed and when these will be charged.
- The Directions stress to licensed moneylenders that they must cease offering loans to borrowers who are unlikely to be able to keep up with the repayment plans and as a result, incur multiple administrative or late payment fees. This is to prevent the snowballing of debts, which borrowers might have difficulty repaying.
- To warn borrowers against accepting such loans, all licensed moneylenders will be required to provide borrowers with a cautionary statement in writing before any loan can be granted. Borrowers who have been given such loans may lodge a formal complaint with the Registry of Moneylenders.
- A sample of the cautionary statement to be provided can be found in Annex A (0.08MB).
- Licensed moneylenders found to be in breach of the Directions will be investigated and dealt with accordingly.
- The Registry of Moneylenders is a department under the Ministry of Law, and carries out regular inspections of licensed moneylenders. Where breaches of moneylending laws are found, enforcement measures are taken, including the suspension or revocation of licences, forfeiture of security deposits, warnings and prosecutions. Those convicted of breaches of the Moneylenders Act and Rules face a fine and/or an imprisonment term on each charge.
Last updated on 26 Jan 2016