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 item of the English legislation was planned “to save the foolish from the extortion of a certain class of the community 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 summed up these consider as follows:

… Much of the proof 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 sale of her household impacts, and the young kid of the aristocracy who in the course of sowing his wild oats ran up large financial obligations, at inflated interest, which his household [was] later on blackmailed into paying to prevent the publicity of court proceedings.

An evaluation of the Singapore parliamentary records on Bills relating to the predecessors to the present MLA shows a consistent legal intent. In Singapore Parliamentary Debates, Official Report (2 September 1959) vol 11 at col 593, Seow Peck Leng made the following remarks:

1 SLR 733 (” City Hardware”) the High Court noted that the MLA has “the salutary objective of proscribing rapacious conduct by unlicensed and unprincipled moneylenders” who prey on individuals who turn to them out of monetary destitution. It stressed that the arrangements of the MLA are not planned to apply to deals made at arm’s length between commercial entities and it has actually never been the goal of the MLA to forbid or impede legitimate industrial intercourse between business individuals.

The High Court further stressed in City Hardware that the Courts must not embrace an over-extensive application of the MLA even though its provisions might be literally interpreted to cover most commercial situations, as that would not advance the legislative purpose of the Act.

The current 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:

Sir, the Moneylenders Act was enacted in 1959, about 50 years earlier. Modifications have actually been few and far between, mainly concentrating on improving the provisions that take on unlicensed lender or loansharking. The Act was planned as a piece of social legislation to protect exactly what we would call “small-time debtors” from unethical moneylenders. For this reason, its chief issue was the charging of inflated interests. The lenders then were likewise essentially small operators.

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

In our judgment, in passing the 2008 changes, Parliament had planned to de-regulate business loaning by omitting this class from the MLA in addition to those already left out prior to 2008. This was to make sure that the circulation of credit in business domain was not stifled. Insofar as paragraph (e) of the meaning of “omitted lender” in s 2 of the MLA is worried, Parliament also related to such customers, that is to say, corporations, limited liability partnerships, service trusts, genuine estate trusts and sophisticated financiers as being a less vulnerable class of borrowers that did not need the protection managed by a piece of social legislation. This in turn validated a lower degree of regulative oversight over the activities of lenders who lent solely to such borrowers.

This background suggests that the MLA simply does not apply to lenders who fall within the meaning of “omitted moneylender” 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 present variation of the MLA was thoroughly 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. The whole dispute in between numerous Members of Parliament appears to have actually concentrated on the implementation of enhanced measures to deal with the “loanshark scourge”, including stiffer penalties under s 14 of the MLA for unlicensed moneylending. Based on an electronic search performed on the said parliamentary report, the word “syndicate” appeared in the search engine result in an overall of 52 circumstances, being in each case contextual referrals to “criminal offense 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 goal of proscribing rapacious conduct by unlicensed and unprincipled lenders” who prey on individuals who turn to them out of monetary destitution. It stressed that the arrangements of the MLA are not meant to apply to deals made at arm’s length in between industrial entities and it has actually never been the goal of the MLA to forbid or hinder genuine business sexual intercourse between industrial individuals.

Insofar as paragraph (e) of the meaning of “excluded moneylender” in s 2 of the MLA is concerned, Parliament also concerned such borrowers, that is to say, corporations, restricted liability collaborations, organisation trusts, genuine estate trusts and sophisticated investors as being a less susceptible class of borrowers that did not require the protection managed by a piece of social legislation. The Bill for the current variation of the MLA was thoroughly 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.