Are you worried about your loan agreement?
You’re not alone.
Thousands of Singaporeans have taken out loans from money lenders, and sometimes things go wrong. That’s why it’s essential to know your rights and how to make a complaint if something goes awry.
This article will tell you everything you need to know about how to make a complaint about a money lender – including what to do, where to go, and what kind of evidence you’ll need.
We hope this information helps you get the fair treatment you deserve.
But first, it’s essential to know how to recognise unfair moneylending practices to make the right call.
Unfair Practices Of Money Lenders
Even some licensed money lenders use unfair practices to gain more customers or increase their profits.
The following practices are tell-tale signs of iffy behaviour. It’s essential to learn them to recognise illegal – and possibly dangerous – conduct.
Anyone who’s ever been barraged by telemarketers or junk mail knows that unwanted advertising is a huge annoyance.
These money lenders are targeting people in desperate financial situations and bombarding them with ads that promise easy loans.
This is an especially insidious form of marketing because it takes advantage of people who are already struggling.
But it’s not just annoying or morally wrong – it’s also illegal in Singapore.
The Ministry of Law (MinLaw) restricts money lenders’ advertising channels in Singapore to just the ones below:
- Business directories
- Consumer directories
- Their websites
- Their physical premises (such as the walls or doors on their building)
Closing Deals All Over The Place
Legal money lenders in Singapore are obliged by MinLaw to conduct so-called due diligence at their official place of business.
That’s to say, they must review all your documents and your identity face to face at their place of business.
Warning: This practice is mandatory even if you send the required documents online.
By contrast, an unfair practice is if they’re willing to close the deal anywhere – even at your home or carpark. Unlicensed lenders might do this to cut corners and avoid detection.
But it’s also a way for them to pressure you to sign the contract quickly, without giving you time to think or understand what you’re agreeing to.
Be very wary if they’re pressuring you to sign a contract on the spot. This is not how a licensed lender should operate.
Licensed money lenders in Singapore don’t have this so-called “processing fee,” where you give them a sum of money before approving the loan to:
- Hasten that approval process
- Grant you a more considerable sum
- Offer you better interest
- Provide you with any loan-related benefits
This is likely to be a scam.
However, licensed money lenders in Singapore can have an admin fee of 10% of your principal amount.
Remember: This admin fee is applied only upon loan disbursal into your account.
For example, a legal money lender is allowed to wire you just $9,000 if you’re getting a $10,000 loan from them.
An illegal money lender in Singapore may ask you for $1,000 as a pre-requisite for lending you the $10,000.
Illegal Rates And Fees
MinLaw caps the maximum amount that licensed money lenders in Singapore can charge for interest and fees to the following amounts:
- 4% per month maximum interest rate, calculated from the outstanding amount. Therefore, your interest decreases as you pay your loan
- 4% maximum late interest rate, calculated from the installment you missed
- A maximum of $60 late payment fee
Unfair practices would entail:
- Imposing a flat 4% per month interest rate throughout your term
- Calculating your late interest rate from the initial loan sum or the outstanding balance, not from the missed installment
- More than $60 when you’ve missed a deadline
- Abusively changing your contract suddenly to supposedly prevent another missed payment
Very High Amounts
Licensed money lenders should respect:
- The maximum caps for unsecured personal loans imposed by MinLaw:
- Up to $500 if you’re a foreigner earning less than $10,000 per year
- Up to $3,000 for Singapore citizens and PRs earning less than $20,000 per year and foreigners earning between $10,001 and $20,000 per year
- Up to six times your monthly income for everyone earning north of $20,000 per year
- The Total Debt Servicing Ratio (TDSR), which is currently 55%. That means your total loan installments can’t add up to more than 55% of your gross earnings.
- The maximum loan-to-income ratio set by the Monetary Authority of Singapore (MAS), which is currently 12 times your monthly earnings. That means a licensed money lender has to look at your previous loans and see how much you’ve already borrowed so they can respect this loan-to-income limit.
Illegal Or Dangerous Behaviour
MinLaw strictly prohibits the following activities by money lenders:
- Threatening, harassing or using violence against you or your family members to collect a debt
- Publishing your name as a debtor in any medium, including newspapers, flyers or online
- Disclosing information about your debt to others without your consent
- Making you sign a blank or incomplete contract
- Asking you to sign a new contract that contains terms that were not discussed with you earlier
- Retaining your NRIC or other personal items to secure the loan illegally
- Asking for your passwords and PINs to any accounts (including, but not limited to, bank accounts)
What Is Unlicensed Moneylending?
Unlicensed money lending, aka loan sharking, means operating without a money lending license from Singapore.
Here’s how it works:
- The unlicensed money lender in Singapore entices you with an offer of quick cash, often without any paperwork or collateral.
- You accept the offer and receive the money, but then they start adding on hidden fees and interest charges.
- Before you know it, you’re trapped in a cycle of debt that’s impossible to escape.
Warning: Loan sharking is an incredibly predatory practice, and it can have devastating consequences.
If caught in a loan shark’s trap, your life can be turned upside down. You might lose your job, your home, and even your family.
Be very careful if you’re being pressured to take out a loan. It might be a loan shark in disguise.
When To Lodge A Complaint Against A Licensed Money Lender
You should lodge a complaint against a licensed money lender if they have:
- Charged you hidden fees
- Lied about the total amount you need to repay
- Threatened or harassed you
- Disclosed information about your loan to other people without your permission
If you’re unsure whether a money lender has broken the law, you can check the list of offences under the Moneylenders Act.
This list includes giving false information about the actual cost of a loan and threatening or using violence against a borrower.
Pro tip: If your agency isn’t on MinLaw’s list of licensed money lenders, it probably doesn’t have a money lending license.
How To Lodge A Complaint Against A Money Lender
If you think a licensed money lender has mistreated you, you can complain to the Registry of Moneylenders at 1800-2255-529.
When making your complaint, you will need to provide:
- Your name and contact details
- The name and licence number of the money lender
- Details about what happened
Here’s how to solve loan shark problems in Singapore:
First, contact the police. You should also notify the Registry of Moneylenders.
Warning: Contact the police immediately if loan sharks are harassing you. Do not try to deal with them on your own.
- Submit an e-complaint: https://www.police.gov.sg/I-Witness
- Access the Ah Long hotline: 1800-924-5664
- Call the police if you’re in immediate danger: 999
Secondly, if you have been a victim of a loan shark in Singapore, you can get help and support from various social services in Singapore.
These institutions provide things like financial assistance, counselling, and legal advice:
- Credit Counselling Singapore: 6225 5227
- MSF ComCare: 1800 222 0000
- Association of Muslim Professionals: 6416 3960
- Adullam Life Counselling: 6659 7844
- Arise2Care Community Services: 6909 0628
- Blessed Grace Social Services: 8428 6377
- One Hope Centre: 6547 1011
- Silver Lining Community Services: 6749 0400
What Happens After You Lodge A Complaint Against A Money Lender
When you lodge a complaint against a money lender, an officer from the Registry of Moneylenders will investigate your case.
If they find that the money lender has broken the law, they will take enforcement action, including:
- Suspending or cancelling the money lender’s licence
- Prosecuting it in court
If loan sharks are harassing you, the police will investigate your case and take appropriate action, such as:
- Protecting you from further foul play and danger
- Making arrests
- Charging the loan sharks in court
What Not To Do When Lodging A Complaint Against A Money Lender
- Give the loan shark any more money
- Try to deal with the loan shark on your own
- Sign any documents without reading them first
- Agree to transfer ownership of your property to the loan shark
Doing any of these things might make it harder for the police to take action against the loan shark. It could also make it more difficult for you to get your money back.
How Not To Fall For Loan Scams
There are all kinds of scams out there, and it seems like there’s a new one every day. But when it comes to money, there’s nothing worse than a loan scam.
Not only can it leave you in a lot of debt, but it can also ruin your personal life.
So how can you protect yourself? Here are a few tips:
- Be wary of unsolicited offers. If you didn’t apply for a loan, chances are the proposal is a scam.
- Don’t pay upfront fees. Blacklisted moneylenders in Singapore will usually require you to pay an upfront fee.
- Know the red flags. Be on the lookout for high interest rates, unrealistic promises, and pressure to sign immediately.
- Research the lender. Before you agree to anything, research the lender to ensure they’re legitimate. MinLaw has a list of all licensed money lenders in Singapore. This list is constantly updated so that any legal lender will be there. You can also check this list of exempt money lenders, meaning agencies who are allowed to operate without a licence.
- Trust your gut. If something feels off, it probably is. Don’t be afraid to walk away from an offer that seems too good to be true.
- Read the terms and conditions carefully. This advice might seem like a no-brainer, but you’d be surprised how many people don’t do this. Make sure you understand the terms of the loan before you agree to anything.
- Keep all documentation. This includes emails, text messages, and other correspondence with the lender. This paperwork will come in handy if you need to file a police report.
- Avoid lenders who offer loans with no credit check. These are almost always scams.
If you think you’ve been the victim of a loan scam, you should contact the Registry of Moneylenders immediately.
Remember, you’re not alone.
There are plenty of resources and support available if you’ve been scammed.
What To Do If You’re Struggling With Money
If you’re struggling with money, you should:
- Get advice from a credible financial counsellor
- Negotiate an emergency loan or a low-credit loan
- Consider taking out a debt consolidation loan if you have many unpaid loans
Credit21 can help you with all of the above, regardless of nationality, credit rating, or income.
We are a licensed money lender in Singapore with over 15 years of experience. We offer personal loans, payday loans, and debt consolidation loans.
We also provide expert financial advice to help you get back on your feet and meet your financial goals.
Apply for a loan now or contact us to find out more about how we can help you.