Month: January 2018

Singapore Money Lenders Act

The MLA was enacted in Singapore in 1936 as the Moneylenders Ordinance (Cap 193, 1936 Ed) and was designed upon the English Moneylenders Acts of 1900 (63 & 64 Vict, c 51) (UK) and 1927 (17 & 18 Geo. 5, c 21) (UK). In Litchfield v Dreyfus [1906] 1 KB 584, Farwell J observed that the object of the English legislation was planned “to conserve the foolish from the extortion of a certain class of the community who are called money-lenders as an offensive term”.

These comments echo the views which the English Select Committee took into account when enacting the English Money-lenders Act 1900. The Crowther Committee’s Report on Consumer Credit (Cmnd 4596, 1971) at para 2.1.22 summarised these deem follows:

… Much of the proof given to the Committee, and to its successor appointed in 1898, was worried about such victims of the rapacious moneylender as the widow required to obtain on a receipt of her family impacts, and the young child of the upper class who in the course of sowing his wild oats added big debts, at outrageous interest, which his family [was] later on blackmailed into paying to prevent the publicity of court procedures.

An evaluation of the Singapore parliamentary records on Bills associating with the predecessors to the current MLA shows an in agreement legal intent. In Singapore Parliamentary Debates, Official Report (2 September 1959) vol 11 at col 593, Seow Peck Leng made the following remarks:

This Bill [referring to the Moneylenders Bill] is admirable for that it safeguards the poor from the clutches of dishonest lenders. This Bill, in my viewpoint, ought to be carried out as soon as possible to relieve the hardship of those already victimised and to prevent those who, because of financial troubles, might be victimised in the future …

It is the very, really bad, Sir, who need security most, who generally take loans of less than $100, and I believe that they are the ones who should be safeguarded …

In City Hardware Pte Ltd v Kenrich Electronics Pte Ltd [2005] 1 SLR 733 (” City Hardware”) the High Court noted that the MLA has “the salutary objective of proscribing rapacious conduct by unprincipled and unlicensed lenders” who prey on individuals who rely on them out of financial destitution. It emphasised that the provisions of the MLA are not planned to apply to transactions made at arm’s length between commercial entities and it has actually never ever been the objective of the MLA to forbid or restrain legitimate business intercourse in between business persons.

The High Court even more stressed in City Hardware that the Courts ought to not adopt an over-extensive application of the MLA although its arrangements might be literally interpreted to cover most business situations, as that would not advance the legal purpose of the Act.

The existing MLA is based significantly on its 2008 predecessor. At the Second Reading Speech for the 2008 modifications (Singapore Parliamentary Debates, Official Report (18 November 2008) vol 85 at cols 1001-1004), the policy objectives of the MLA were again acknowledged by Associate Professor Ho Peng Kee, the then Senior Minister of State for Law:

Sir, the Moneylenders Act was enacted in 1959, about 50 years back. Changes have actually been scarce, mainly concentrating on improving the arrangements that take on unlicensed lender or loansharking. The Act was intended as a piece of social legislation to secure exactly what we would call “small-time debtors” from dishonest moneylenders. Hence, its chief concern was the charging of outrageous interests. The lenders then were likewise essentially small-scale operators.

In going over the 2008 amendments to the MLA, the Court of Appeal recently made the following observations on “omitted lenders” in Sheagar s/o T M Veloo v Belfield International (HongKong) Ltd [2014] SGCA 24 (” Sheagar”):.

In our judgment, in passing the 2008 amendments, Parliament had actually planned to de-regulate commercial loaning by excluding this class from the MLA in addition to those currently omitted prior to 2008. This was to guarantee that the circulation of credit in the business domain was not suppressed. Moreover, insofar as paragraph (e) of the definition of “excluded lender” in s 2 of the MLA is concerned, Parliament also related to such customers, that is to state, corporations, limited liability collaborations, company trusts, property trusts and sophisticated investors as being a less vulnerable class of customers that did not require the defense managed by a piece of social legislation. This in turn validated a lower degree of regulative oversight over the activities of lenders who provided specifically to such debtors.

This background recommends that the MLA just does not apply to lenders who fall within the definition of “omitted moneylender” under s 2 of the MLA and their activities therefore do not come within the regulatory ambit of the MLA at all. (focus mine).

The Bill for the present version of the MLA was completely debated in Parliament in January 2010 at the Second Reading Speech for the Moneylenders (Amendment) Bill (Singapore Parliamentary Debates, Official Report (12 January 2010) vol 86. The whole dispute between a number of Members of Parliament appears to have actually focused on the application of improved measures to tackle the “loanshark scourge”, including stiffer charges under s 14 of the MLA for unlicensed moneylending. Based on an electronic search performed on the stated parliamentary report, the word “syndicate” appeared in the search engine result in a total of 52 instances, remaining in each case contextual referrals to “criminal offense syndicate” or “loanshark syndicate”; there was not one reference to “syndicated loan”.

The MLA was enacted in Singapore in 1936 as the Moneylenders Ordinance (Cap 193, 1936 Ed) and was designed upon the English Moneylenders Acts of 1900 (63 & 64 Vict, c 51) (UK) and 1927 (17 & 18 Geo. 1 SLR 733 (” City Hardware”) the High Court noted that the MLA has “the salutary objective of proscribing rapacious conduct by unprincipled and unlicensed lenders” who prey on individuals who turn to them out of monetary destitution. It stressed that the arrangements of the MLA are not intended to apply to deals made at arm’s length between business entities and it has actually never ever been the objective of the MLA to forbid or restrain legitimate commercial sexual intercourse between business persons.

Insofar as paragraph (e) of the meaning of “omitted lender” in s 2 of the MLA is worried, Parliament likewise regarded such customers, that is to state, corporations, limited liability partnerships, business trusts, genuine estate trusts and advanced financiers as being a less susceptible class of debtors that did not need the security paid for by a piece of social legislation. The Bill for the existing version of the MLA was completely debated in Parliament in January 2010 at the Second Reading Speech for the Moneylenders (Amendment) Bill (Singapore Parliamentary Debates, Official Report (12 January 2010) vol 86.