Pawnshops have been advertising on various media, and legal moneylenders pepper the island. This is good news for those in need of quick cash, but bad news for society in general. After all, personal finances must be dire if these businesses are able to thrive.
Licensed moneylenders may be a better alternative to the traditional – and also very illegal – loan sharks that people used to approach, but the methods used between both bear a lot of similarities.
Most people would choose to go to licensed moneylenders, if nothing but the sheer fact that they are legal and would probably save themselves the trouble of being subjected to some of the more extreme of the loan sharks’ debt collection methods. No more pig heads hung outside the door, no more embarrassing O$P$ spray painted along public corridors of housing estates, no more threats.
The police were called after debt collectors, allegedly from a registered moneylending business, got a little too rough while trying to recover $21,000 from a food stall owner at Funan Mall. Utensils, cooking equipment and even the cash register were swept to the floor, and the collectors returned with a banner that announced that they were collecting debt.
According to the law, these licensed moneylenders need to seek approval from the Registry of Moneylenders before attempting to recover the loan, as well as all other aspect of their business, to ensure that the people operating and/or working in the moneylending business are credible and proper. Having said that, these moneylenders are allowed to go about their business as long as they do not commit any crime.
More concrete laws and regulations should be set in place to govern licensed moneylenders. After all, they are already registered and have approval to operate. Without stricter regulations, these legal moneylenders are just a tad bit more respectable than the loan sharks.
Labour MP Zainal Sapari once shared in Parliament about plans to further regulate licensed moneylenders. And this threw up some shocking revelations about the business: effective interest rates of 43000% and 159,000% (no typos there), fee charges that were larger than the loan principal, and other practices which he called “absurd”.
Mr Sapari had asked for several measures, including 1) overall caps on interest and charges payable within a credit year, 2) definitions and stipulations on the types of charges moneylenders can impose, 3) limits to the total amount payable in a credit year after which the loan is considered fully discharged.
But Law Minister K Shanmugam was reluctant to give assurances on a timeline for a rollout of these changes, nor which would be implemented, citing concerns about the industry “going underground”.
How many more of these incidents do we need to have fiercer policing of this intimidating industry?
Must reads» RIP Responsible Investigative Journalism
» Nasty letter to nurse: netizens fight back
» The journey in lifting wages of low waged workers
» 10 Running/Cycling Events you need to check out in 2015
» So you wanna adopt a puppy?