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 things of the English legislation was intended “to conserve the silly from the extortion of a certain class of the community who are called money-lenders as an offensive term”.

These comments echo the views which the English Select Committee took into account when enacting the English Money-lenders Act 1900. The Crowther Committee’s Report on Consumer Credit (Cmnd 4596, 1971) at para 2.1.22 summed up these views as follows:

… Much of the proof offered to the Committee, and to its follower selected in 1898, was worried about such victims of the rapacious moneylender as the widow required to borrow on a bill of sale of her home results, and the young kid of the upper class who in the course of sowing his wild oats added large financial obligations, at exorbitant interest, which his family [was] later on blackmailed into paying to avoid the promotion of court procedures.

An evaluation of the Singapore parliamentary records on Bills associating with the predecessors to the existing MLA shows a consistent legislative intent. For instance, 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 goal of proscribing rapacious conduct by unlicensed and unprincipled moneylenders” who prey on people who turn to them out of monetary destitution. It stressed that the arrangements of the MLA are not planned to use to deals made at arm’s length between commercial entities and it has never been the goal of the MLA to prohibit or hamper legitimate commercial sexual intercourse between industrial individuals.

The High Court further emphasised in City Hardware that the Courts need to not adopt an over-extensive application of the MLA even though its provisions may be literally interpreted to cover most commercial situations, as that would not advance the legal function of the Act.

The present MLA is based significantly 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 objectives of the MLA were once again acknowledged by Associate Professor Ho Peng Kee, the then Senior Minister of State for Law:

Modifications have been couple of and far between, mainly focusing on improving the arrangements that take on unlicensed lender or loansharking. The Act was intended as a piece of social legislation to safeguard what we would call “small-time debtors” from unscrupulous lenders.

In talking about 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 changes, Parliament had actually meant to de-regulate commercial borrowing by excluding this class from the MLA in addition to those currently omitted prior to 2008. This was to make sure that the circulation of credit in the business domain was not suppressed. Moreover, insofar as paragraph (e) of the meaning of “omitted moneylender” in s 2 of the MLA is concerned, Parliament also concerned such debtors, that is to state, corporations, restricted liability partnerships, service trusts, realty trusts and sophisticated investors as being a less susceptible class of borrowers that did not need the defense paid for by a piece of social legislation. This in turn validated a lower degree of regulative oversight over the activities of lenders who lent exclusively to such debtors.

This background suggests that the MLA just does not apply to lenders who fall within the meaning of “excluded lender” under s 2 of the MLA and their activities for that reason do not come within the regulatory ambit of the MLA at all. (focus mine).

The Bill for the current variation 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 argument between a number of Members of Parliament appears to have actually focused on the implementation of boosted measures to take on the “loanshark scourge”, including stiffer penalties under s 14 of the MLA for unlicensed moneylending. Based upon an electronic search performed on the said parliamentary report, the word “syndicate” appeared in the search engine result in an overall of 52 circumstances, remaining in each case contextual references to “criminal offense distribute” or “loanshark distribute”; there was not one reference 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 unprincipled and unlicensed lenders” who prey on people who turn to them out of monetary destitution. It emphasised that the arrangements of the MLA are not intended to apply to deals made at arm’s length between business entities and it has never ever been the objective of the MLA to restrict or restrain legitimate business intercourse in between industrial individuals.

Insofar as paragraph (e) of the meaning of “left out moneylender” in s 2 of the MLA is worried, Parliament likewise regarded such debtors, that is to say, corporations, restricted liability collaborations, organisation trusts, real estate trusts and sophisticated financiers as being a less susceptible class of borrowers that did not need the defense paid for by a piece of social legislation. The Bill for the existing version 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.