35 ordered to hand over files in official hunt for cases where properties targeted as collateral
COMPLAINTS against moneylenders have risen sharply and the Registry of Moneylenders is now taking them to task.
The registry, run by the Insolvency & Public Trustee's Office, recently sent out letters to at least 35 moneylenders, demanding that they hand over their files on some of their cases. Those who fail to do so can be fined the maximum $20,000 and jailed for up to six months.
In particular, the registry is looking for cases where the moneylenders filed caveats against their debtors' properties - a move which ensures they get first bite of the proceeds from a property's sale if the borrower cannot pay up.
In just four months this year, there were 21 complaints against moneylenders, compared with 18 last year and only seven for the whole of 2008.
While the registry did not say how many among them had been filed against moneylenders who targeted their debtors' properties as collateral, such a practice has drawn the attention of the Ministry of National Development (MND).
Recently, National Development Minister Mah Bow Tan told Parliament that the ministry would be looking into measures to stamp out the practice.
Yesterday, Associate Professor Ho Peng Kee, Senior Minister of State for Law and Home Affairs, told Parliament that three moneylenders had not had their licences renewed because they had flouted the amended Moneylenders' Act which took effect on March 1 last year.
He added that licensed moneylenders who did not explain to borrowers the terms and conditions of their loans or who gave loans under false pretences were breaking the law.
Prof Ho said the authorities were also keeping a close watch on the industry to ensure that illegal moneylenders do not apply for a licence to evade the crackdown on them.
Yesterday, the Registry of Moneylenders gave The Straits Times an idea of the nature of the complaints it has received: For instance, the terms and conditions were either not disclosed or properly explained. In some cases, the borrowers were not even given copies of the documents they had signed.
While the registry would not say how many moneylenders it had sent the letters to, The Straits Times understands that a large proportion of those who lodged caveats were from a group of moneylenders who called themselves the Association of Moneylenders (Singapore), or AMS.
Unlike the Moneylenders' Association of Singapore, which has about 60 members and is registered as a society, the AMS has only 38 members and is not registered even though it was set up in September last year.
Many AMS members either own property agencies or are property agents who focus on giving loans to HDB flat sellers.
The group's president, Mr Merson Chow, who also owns a property business, said the group was set up by a 'new generation of moneylenders' who had joined the industry in the last two years and wanted to break away from the traditional way in which the moneylending business is carried out.
'We're more aggressive and the traditional moneylenders are happy with the way things are,' said Mr Chow.
He denied allegations that his association's members charge high interest rates on loans and insisted that only a 'small number' of them were involved in the property business.
However, he conceded that his group may not have any choice but to merge with the other moneylending association soon, given the Government's announcement that moneylenders cannot be involved in the property business.
Mr Chow added that he will pull out of moneylending to concentrate on his property business. He will also ask one of the two moneylending firms he invested in to move out of his property agency.
Several moneylenders who are in a similar situation said they have no choice but to shut down their moneylending businesses.
Mr James Lee, chief executive officer of James Lee Realty, said he will not be renewing his firm's moneylending licence when it expires this December.
'The market has been spoilt by black sheep who charge high interest rates and the resulting action is too drastic,' he said.
Another agent, who declined to be named, said he would focus on his property business instead.
'If you can't place caveats, no one will want to do moneylending because the risk is too great. In the end, people will turn to the loan sharks again,' he said.
Source: Straits Times, 20 May 2010
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