Singapore passed amendments to the law on November 22, allowing licensed moneylenders to run credit checks on loan applicants and disclose borrower information to a wider range of third parties, including credit bureaus. These credit bureaus can then provide additional details on an applicant’s creditworthiness and debt to help moneylenders make informed decisions on granting loans. Previously, moneylenders were restricted in sharing data.
Senior Parliamentary Secretary for Law Rahayu Mahzam highlighted the limitations of comprehensive credit checks on borrowers due to the current Moneylenders Act. Licensed moneylenders were only permitted to obtain credit reports from the Moneylenders Credit Bureau (MLCB), preventing them from accessing credit reports from other bureaus. This restriction could potentially lead to over-borrowing by individuals who withhold or inaccurately declare their credit information. However, the extent of borrower information shared will be limited to what is necessary.
The amendments also allow licensed moneylenders to share borrower information with third parties engaged in IT support or debt recovery, as well as with prescribed persons for purposes related to the welfare and protection of applicants, borrowers, and sureties. Additionally, these amendments enable moneylenders to obtain records from public agencies to verify the accuracy of information provided by loan applicants.
As for individuals and organizations related to the welfare and protection of borrowers, the Ministry of Law plans to begin with social service agencies that assist borrowers in debt consolidation or restructuring. The disclosure of loan information to such agencies is crucial for effective negotiation and ultimately benefits borrowers.
As a borrower, it is important to understand what the recent amendments to the Moneylenders Act mean for you.
Here is a summary of what it means to borrowers:
Credit checks will be more comprehensive: Licensed moneylenders can now run more comprehensive credit checks on loan applicants, which means they will be better equipped to assess a borrower’s creditworthiness and indebtedness. This will help moneylenders make more informed decisions about whether to grant a loan.
Borrower information will be shared with more parties: Licensed moneylenders will now be allowed to share borrower information with third parties, such as prescribed credit bureaus, IT support providers, and debt recovery agents. The extent of information sharing will be limited to what is necessary, but borrowers should be aware that their information may be shared more widely than before.
Over-borrowing may be prevented: The previous restrictions on who licensed moneylenders could share data with may have enabled over-borrowing by individuals who chose to withhold or inaccurately declare their credit information. The new amendments may prevent this by allowing licensed moneylenders to obtain more complete credit reports from a greater number of credit bureaus.
Verification of information will be more thorough: Licensed moneylenders will now be able to obtain records from public agencies to verify the accuracy of information submitted by loan applicants. This means borrowers should ensure that they provide truthful and accurate information when applying for a loan, as false information may be easily detected.
Protection for borrowers and sureties: Licensed moneylenders will be allowed to share borrower information with prescribed persons “for purposes related to the welfare and protection of applicants, borrowers and sureties”. This means that borrowers and their sureties may receive increased protection under the new law.
In summary, the recent amendments to the Moneylenders Act may result in more comprehensive credit checks, wider sharing of borrower information, and increased protection for borrowers and sureties. Borrowers should ensure that they provide truthful and accurate information when applying for a loan, and be aware that their information may be shared with more third parties than before.