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. 1 KB 584, Farwell J observed that the object of the English legislation was intended “to save the silly from the extortion of a particular class of the neighborhood who are called money-lenders as an offensive 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 designated in 1898, was worried about such victims of the rapacious lender as the widow forced to borrow on a receipt of her home results, and the young son of the aristocracy who in the course of sowing his wild oats added big debts, at inflated interest, which his household [was] later on blackmailed into paying to prevent the publicity of court procedures.

An evaluation of the Singapore parliamentary records on Bills associating with the predecessors to the present MLA shows an in agreement legal 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 laudable for that it safeguards the bad from the clutches of deceitful moneylenders. This Bill, in my viewpoint, need to be carried out as soon as possible to relieve the challenge of those currently victimised and to prevent those who, because of monetary troubles, might be victimised in the future …

It is the very, very poor, Sir, who need defense most, who normally take loans of less than $100, and I believe that they are the ones who must be protected …

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 goal of proscribing rapacious conduct by unprincipled and unlicensed lenders” who prey on people who turn to them out of financial destitution. It stressed that the arrangements of the MLA are not intended to apply to deals made at arm’s length in between business entities and it has actually never been the goal of the MLA to forbid or restrain legitimate industrial sexual intercourse in between business individuals.

The High Court even more stressed in City Hardware that the Courts ought to not adopt an over-extensive application of the MLA although its provisions might be actually construed to cover most commercial circumstances, 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 amendments (Singapore Parliamentary Debates, Official Report (18 November 2008) vol 85 at cols 1001-1004), the policy goals of the MLA were 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. Changes have been few and far between, mostly concentrating on boosting the provisions that deal with unlicensed lender or loansharking. The Act was meant as a piece of social legislation to secure exactly what we would call “small-time borrowers” from unethical moneylenders. Its chief issue was the charging of expensive interests. The lenders then were likewise basically small operators.

In discussing the 2008 changes to the MLA, the Court of Appeal recently made the following observations on “excluded lenders” 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 actually meant to de-regulate industrial borrowing by excluding this class from the MLA in addition to those already excluded prior to 2008. This was to make sure that the flow of credit in business domain was not suppressed. Insofar as paragraph (e) of the definition of “excluded lender” in s 2 of the MLA is worried, Parliament also related to such debtors, that is to say, corporations, limited liability collaborations, organisation trusts, real estate trusts and sophisticated investors as being a less susceptible class of customers that did not need 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 specifically to such debtors.

This background suggests that the MLA simply 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 regulative ambit of the MLA at all. (emphasis mine).

The Bill for the existing version of the MLA was completely disputed 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 dispute in between numerous Members of Parliament appears to have actually concentrated on the execution of enhanced procedures to tackle the “loanshark scourge”, consisting of stiffer charges under s 14 of the MLA for unlicensed moneylending. Based upon an electronic search conducted on the said parliamentary report, the word “distribute” appeared in the search results page in a total of 52 circumstances, remaining in each case contextual references to “crime syndicate” or “loanshark distribute”; 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 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 objective of proscribing rapacious conduct by unlicensed and unprincipled lenders” who prey on people who turn to them out of financial destitution. It stressed that the arrangements of the MLA are not intended to apply to transactions made at arm’s length between industrial entities and it has never been the objective of the MLA to forbid or impede genuine business sexual intercourse between commercial persons.

Insofar as paragraph (e) of the meaning of “excluded lender” in s 2 of the MLA is concerned, Parliament also related to such borrowers, that is to say, corporations, restricted liability collaborations, organisation trusts, genuine estate trusts and sophisticated investors as being a less vulnerable class of customers that did not require the security paid for by a piece of social legislation. The Bill for the present variation of the MLA was completely disputed 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.