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 specific class of the neighborhood 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 summarised these consider as follows:

… Much of the evidence given to the Committee, and to its successor appointed in 1898, was interested in such victims of the rapacious lender as the widow required to borrow on a proof of purchase of her household results, and the young boy of the aristocracy who in the course of sowing his wild oats ran up big debts, at expensive interest, which his household [was] later blackmailed into paying to prevent the publicity of court proceedings.

A review of the Singapore parliamentary records on Bills associating with the predecessors to the current MLA shows a consistent legal intent. For instance, 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 the fact that it secures the poor from the clutches of deceitful lenders. This Bill, in my viewpoint, need to be implemented as soon as possible to reduce the challenge of those currently victimised and to prevent those who, because of monetary difficulties, might be victimised in the future …

It is the extremely, extremely poor, Sir, who require protection most, who typically take loans of less than $100, and I believe that they are the ones who should be secured …

In City Hardware Pte Ltd v Kenrich Electronics Pte Ltd [2005] 1 SLR 733 (” City Hardware”) the High Court kept in mind that the MLA has “the salutary goal of proscribing rapacious conduct by unlicensed and unprincipled lenders” who take advantage of people who turn to them from monetary destitution. It stressed that the arrangements of the MLA are not meant to apply to transactions made at arm’s length in between industrial entities and it has never ever been the objective of the MLA to prohibit or hamper genuine business sexual intercourse between commercial individuals.

The High Court further stressed in City Hardware that the Courts ought to not adopt an over-extensive application of the MLA despite the fact that its arrangements might be literally construed to cover most commercial situations, 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 objectives 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 back. Amendments have been few and far between, mostly focusing on improving the provisions that take on unlicensed moneylender or loansharking. The Act was planned as a piece of social legislation to protect exactly what we would call “small-time borrowers” from unscrupulous moneylenders. For this reason, its chief issue was the charging of exorbitant interests. The lenders then were likewise essentially small operators.

In going over 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 amendments, Parliament had intended to de-regulate industrial borrowing by excluding this class from the MLA in addition to those currently omitted prior to 2008. Insofar as paragraph (e) of the definition of “excluded lender” in s 2 of the MLA is concerned, Parliament likewise regarded such borrowers, that is to say, corporations, limited liability partnerships, company trusts, genuine estate trusts and sophisticated investors as being a less susceptible class of debtors that did not require the protection managed by a piece of social legislation.

This background recommends that the MLA simply does not apply to lenders who fall within the meaning of “left out 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 completely 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 entire debate in between numerous Members of Parliament appears to have focused on the implementation of improved steps to deal with the “loanshark scourge”, including stiffer charges under s 14 of the MLA for unlicensed moneylending. Based upon an electronic search performed on the said parliamentary report, the word “distribute” appeared in the search results in a total of 52 circumstances, remaining in each case contextual recommendations to “criminal offense syndicate” or “loanshark syndicate”; 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 designed 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 unprincipled and unlicensed lenders” who prey on people 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 business entities and it has never ever been the goal of the MLA to forbid or restrain genuine industrial intercourse in between business individuals.

Insofar as paragraph (e) of the meaning of “excluded moneylender” in s 2 of the MLA is worried, Parliament likewise concerned such customers, that is to state, corporations, limited liability collaborations, service trusts, genuine estate trusts and advanced financiers as being a less susceptible class of borrowers that did not require the security managed by a piece of social legislation. The Bill for the present variation of the MLA was completely 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.