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

When enacting the English Money-lenders Act 1900, these remarks 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 deem follows:

… Much of the evidence provided to the Committee, and to its successor designated in 1898, was worried about such victims of the rapacious moneylender as the widow required to obtain on a receipt of her household results, and the young boy of the aristocracy who in the course of sowing his wild oats added big financial obligations, at expensive interest, which his family [was] later blackmailed into paying to avoid the publicity of court proceedings.

A review of the Singapore parliamentary records on Bills associating with the predecessors to the current MLA shows a congruent 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 kept in mind that the MLA has “the salutary objective of proscribing rapacious conduct by unlicensed and unprincipled lenders” who prey on individuals who turn to them out of financial destitution. It emphasised that the arrangements of the MLA are not planned to use to deals made at arm’s length in between industrial entities and it has never been the objective of the MLA to prohibit or impede genuine commercial intercourse in between commercial persons.

The High Court further emphasised in City Hardware that the Courts ought to not embrace an over-extensive application of the MLA despite the fact that its provisions might be literally construed to cover most industrial circumstances, as that would not advance the legislative function of the Act.

The current MLA is based substantially on its 2008 predecessor. At the Second Reading Speech for the 2008 modifications (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:

Amendments have actually been few and far in between, mainly focusing on enhancing the provisions that take on unlicensed moneylender or loansharking. The Act was intended as a piece of social legislation to protect exactly what we would call “small-time borrowers” from dishonest moneylenders.

In talking about the 2008 amendments to the MLA, the Court of Appeal just 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 amendments, Parliament had meant to de-regulate commercial loaning by excluding this class from the MLA in addition to those currently left out prior to 2008. Insofar as paragraph (e) of the meaning of “left out moneylender” in s 2 of the MLA is concerned, Parliament likewise concerned such debtors, that is to state, corporations, limited liability partnerships, business trusts, genuine estate trusts and sophisticated financiers as being a less vulnerable class of borrowers that did not require the security managed by a piece of social legislation.

This background suggests that the MLA just does not apply to lenders who fall within the definition of “omitted moneylender” under s 2 of the MLA and their activities for that reason do not come within the regulative ambit of the MLA at all. (emphasis mine).

The Bill for the existing version 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 entire dispute in between numerous Members of Parliament appears to have focused on the execution of boosted steps to take on the “loanshark scourge”, including stiffer charges under s 14 of the MLA for unlicensed moneylending. Based on an electronic search performed on the stated parliamentary report, the word “syndicate” appeared in the search results page in an overall of 52 instances, being 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 moneylenders” who prey on people who turn to them out of financial destitution. It emphasised that the provisions of the MLA are not intended to apply to transactions made at arm’s length in between business entities and it has actually never ever been the objective of the MLA to restrict or impede legitimate industrial intercourse in between commercial individuals.

Insofar as paragraph (e) of the definition of “omitted moneylender” in s 2 of the MLA is worried, Parliament also concerned such borrowers, that is to say, corporations, limited liability collaborations, company trusts, genuine estate trusts and sophisticated investors as being a less vulnerable class of borrowers that did not require the security managed 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.