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 things of the English legislation was intended “to conserve the foolish from the extortion of a certain class of the community 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 consider as follows:

… Much of the evidence 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 borrow on a proof of purchase of her home effects, and the young child of the upper class who in the course of sowing his wild oats ran up large debts, at exorbitant interest, which his family [was] later blackmailed into paying to avoid the promotion of court procedures.

An evaluation of the Singapore parliamentary records on Bills connecting to the predecessors to the current MLA demonstrates a consistent legislative intent. For example, 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 laudable for the fact that it safeguards the poor from the clutches of unscrupulous moneylenders. This Bill, in my opinion, ought to be implemented as soon as possible to alleviate the difficulty of those already victimised and to prevent those who, because of financial difficulties, might be victimised in the future …

It is the very, very poor, Sir, who need security most, who generally take loans of less than $100, and I think that they are the ones who ought to be secured …

In City Hardware Pte Ltd v Kenrich Electronics Pte Ltd [2005] 1 SLR 733 (” City Hardware”) the High Court kept in mind that the MLA has “the salutary goal of proscribing rapacious conduct by unprincipled and unlicensed moneylenders” who prey on people who turn to them out of monetary destitution. It stressed that the arrangements of the MLA are not intended to apply to transactions made at arm’s length in between industrial entities and it has never been the objective of the MLA to forbid or hinder legitimate industrial sexual intercourse in between business persons.

The High Court even more emphasised in City Hardware that the Courts must not adopt an over-extensive application of the MLA despite the fact that its arrangements might be actually construed to cover most commercial scenarios, as that would not advance the legislative purpose of the Act.

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

Modifications have actually been couple of and far in between, mainly focusing on enhancing the arrangements that deal with unlicensed lender or loansharking. The Act was planned as a piece of social legislation to protect what we would call “small-time debtors” from dishonest moneylenders.

In talking about the 2008 changes to the MLA, the Court of Appeal recently made the following observations on “excluded moneylenders” in Sheagar s/o T M Veloo v Belfield International (HongKong) Ltd [2014] SGCA 24 (” Sheagar”):.

In our judgment, in passing the 2008 modifications, Parliament had meant to de-regulate commercial loaning by omitting this class from the MLA in addition to those currently omitted prior to 2008. This was to make sure that the flow of credit in the business domain was not suppressed. Insofar as paragraph (e) of the meaning of “omitted lender” in s 2 of the MLA is concerned, Parliament also concerned such customers, that is to say, corporations, restricted liability collaborations, organisation trusts, real estate trusts and advanced financiers as being a less vulnerable class of debtors that did not require the security afforded by a piece of social legislation. This in turn validated a lower degree of regulative oversight over the activities of lenders who provided solely to such customers.

This background recommends that the MLA just does not apply to lenders who fall within the definition of “left out lender” 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 thoroughly discussed 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 debate between numerous Members of Parliament appears to have actually focused on the execution of enhanced steps to deal with the “loanshark scourge”, consisting of stiffer charges under s 14 of the MLA for unlicensed moneylending. Based on an electronic search performed on the said parliamentary report, the word “distribute” appeared in the search engine result in a total of 52 instances, being in each case contextual recommendations to “criminal offense syndicate” or “loanshark syndicate”; there was not one recommendation 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 people 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 in between industrial entities and it has never been the objective of the MLA to forbid or hinder genuine business intercourse in between business individuals.

Insofar as paragraph (e) of the definition of “omitted lender” in s 2 of the MLA is concerned, Parliament likewise concerned such debtors, that is to say, corporations, limited liability collaborations, business trusts, real estate trusts and sophisticated financiers as being a less susceptible class of customers that did not need the protection paid for by a piece of social legislation. The Bill for the existing 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.