Ravi Chandran
From Sep 10, remittance companies will be prohibited from providing loan services.
By: Phoenix Lee/
The Monetary Authority of Singapore (MAS) which made this announcement on June 10 said the prohibition on loan services will not affect existing loans, including restructured and refinancing loans. MAS’s announcement on loan services by remittance companies comes after Mr Billy Lee wrote to the Straits Times asking if remittance firms can lend money. Mr Lee is the founder and executive director of Blessed Grace Social Services, a charity which helps workers to negotiate with moneylenders and devise repayment plans.
He said that his voluntary welfare organisation has been helping distressed maids with loans to licensed moneylenders to negotiate repayment plans. In doing this, they noticed that many maids have loans with a particular remittance company.
Mr Lee said that a check with the MAS revealed that it is not their intent to allow companies issued a licence for remittance business to conduct consumer lending. Lending charges and late payments for moneylenders are clearly spelt out and governed by the Registry of Moneylenders under the Ministry of Law.
Despite such restrictions, Mr Lee said this particular remittance company was able to set its own charges and penalties without any regulatory governance. He asked the relevant authorities help to clarify this discrepancy.
In reply to Mr Lee, the MAS said:
“We thank Mr Billy Lee for his letter “Can remittance companies lend money?” (Straits Times online, 18 January 2019). The Monetary Authority of Singapore (MAS) has been in contact with Mr Lee on his feedback.
Remittance companies are currently licensed under the Money-changing and Remittance Businesses Act (MCRBA). The MCRBA regulates licensees for their money-changing and remittance activities, primarily to mitigate the risks of money-laundering and terrorism financing. In the past year, MAS has been alerted to a remittance licensee offering consumer loans.
It is not the intent of MAS to allow remittance licensees to conduct consumer lending. If licensees wish to do more, they must hold the appropriate licence and be subject to the relevant regulatory measures. We have explained to Mr Lee that when the new Payment Services Bill (PSB) comes into force later this year, licensees under the PSB will be prohibited from conducting consumer lending.
Remittance companies that are currently conducting consumer lending will have to cease such activities by the time they are licensed under the PSB.”
The prohibition notice on loan services by remittance firms was issued even before the new Payment Services Act (PSA) comes into force. The existing Payment Systems (Oversight) Act and the Money-changing and Remittance Businesses Act will both be repealed once the PSA takes effect next year.
Table of Contents
https://www.icompareloan.com/resources/loan-consultant/
While licensed moneylenders can only issue loans to foreign domestic workers with a loan cap of $1,500, remittance companies were not bound by this rule. MAS said that it will continue to monitor the lending activities of remittance licensees closely, and will not hesitate to take further action where appropriate.
Industry observers were vocal in saying that offering loans is an unusual service to be given by remittance firms because their primary role is to receive money for the purpose of transmitting it overseas. It is believed that these remittance firms have seen a loophole in the existing regulations thereby giving them the guts to exploit the situation of foreign domestic workers.
The review comes as the Government is tightening money lending rules to protect foreigners residing or working here. Statistics released by Ministry of Law and the Ministry of Manpower in October 2018 showed that more foreigners are borrowing from licensed moneylenders.
https://www.icompareloan.com/resources/lending-factors/
7,500 foreign workers obtained loan services from licensed money lenders in 2016. This number increased to 35,000 in the first half of 2018 alone.
Mr Lee in speaking to the Straits Times about the prohibition to loan services by remittance firms said he has received distress calls from foreign domestic workers with multiple debts, and that some have lost their jobs here and were sent home as a result of “aggressive collection tactics” of some remittance firms. The tactics include sending letters of demand addressed to their employers and continually harassing them with threatening text messages.
In urging the authority to stop the loan services with immediate effect, Mr Lee said that this would prevent recalcitrant remittance firms from advertising their credit facility to foreign domestic workers who have reached their borrowing cap of $1,500 with the licensed moneylenders.
How to Secure a Business Expansion Loan Quickly
If you are searching for a business expansion loan, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.
If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.
Contact us for advice on a new home loan.
Contact us for home loan or refinancing advice.
