Singapore’s Money Lending Act For Money Lenders

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 things of the English legislation were planned “to conserve the foolish from the extortion of a certain class of the neighborhood who are called money-lenders as an offending term”.

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

… Much of the evidence provided to the Committee, and to its successor designated in 1898, was interested in such victims of the rapacious lender as the widow required to obtain on a proof of purchase of her home results, and the young son of the aristocracy who in the course of sowing his wild oats added large debts, at exorbitant interest, which his household [was] later blackmailed into paying to prevent the promotion of court proceedings.

A review of the Singapore parliamentary records on Bills connecting to the predecessors to the existing MLA shows a congruent legislative 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 protects the poor from the clutches of deceitful moneylenders. This Bill, in my opinion, need to be executed as soon as possible to relieve the difficulty of those currently victimised and to prevent those who, because of monetary problems, might be victimised in the future …

It is the very, extremely bad, Sir, who need security most, who normally take loans of less than $100, and I believe that they are the ones who must 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 moneylenders” who victimize individuals who rely on them from monetary destitution. It stressed that the provisions of the MLA are not planned to apply to deals made at arm’s length between industrial entities and it has never ever been the objective of the MLA to prohibit or hinder legitimate commercial intercourse in between business persons.

The High Court further stressed in City Hardware that the Courts ought to not adopt an over-extensive application of the MLA despite the fact that its arrangements might be literally construed to cover most industrial situations, as that would not advance the legal function of the Act.

The existing MLA is based considerably on its 2008 predecessor. At the Second Reading Speech for the 2008 amendments (Singapore Parliamentary Debates, Official Report (18 November 2008) vol 85 at cols 1001-1004), the policy objectives of the MLA were once 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 ago. Modifications have actually been few and far between, primarily concentrating on improving the provisions that take on unlicensed moneylender or loansharking. The Act was planned as a piece of social legislation to secure what we would call “small-time borrowers” from deceitful moneylenders. Its chief issue was the charging of outrageous interests. The lenders then were likewise essentially small-scale operators.

In talking about the 2008 modifications to the MLA, the Court of Appeal just 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 intended to de-regulate business borrowing by omitting this class from the MLA in addition to those currently excluded prior to 2008. Insofar as paragraph (e) of the definition of “omitted moneylender” in s 2 of the MLA is worried, Parliament also regarded such customers, that is to say, corporations, limited liability partnerships, business trusts, genuine estate trusts and sophisticated financiers as being a less vulnerable class of borrowers that did not need the security afforded by a piece of social legislation.

This background suggests that the MLA merely does not apply to lenders who fall within the meaning of “excluded moneylender” under s 2 of the MLA and their activities for that reason do not come within the regulatory ambit of the MLA at all. (emphasis mine).

The Bill for the present variation 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 entire argument in between a number of Members of Parliament appears to have actually focused on the execution of boosted measures to take on the “loanshark scourge”, consisting of stiffer penalties under s 14 of the MLA for unlicensed moneylending. Based upon an electronic search performed on the said parliamentary report, the word “distribute” appeared in the search results page in an overall of 52 circumstances, remaining in each case contextual recommendations to “crime syndicate” or “loanshark distribute”; 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 modelled 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 goal of proscribing rapacious conduct by unlicensed and unprincipled lenders” who prey on people who turn to 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 in between commercial entities and it has never ever been the goal of the MLA to restrict or hinder genuine business intercourse between industrial individuals.

Insofar as paragraph (e) of the definition of “excluded moneylender” in s 2 of the MLA is concerned, Parliament likewise regarded such customers, that is to state, corporations, limited liability collaborations, service trusts, genuine estate trusts and advanced investors as being a less vulnerable class of debtors that did not need the security paid for by a piece of social legislation. The Bill for the current variation of the MLA was thoroughly 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.

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