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Moneylenders Registry issues directions to curb abuses on short-term loans, split loans
THE Registry of Moneylenders has released a set of directions to all licensed moneylenders to prevent abuses relating to short-term and split loans.
The directions, which serve as a supplement to the Moneylenders Act and Rules, aim to address the certain practices; namely, misleading borrowers into believing they can only be granted weekly loans under a new law, dividing a single loan into different parts so that late fees can be slapped on each component, as well as offering short-term loans of under a month. In the third instance, borrowers end up having to repeatedly re-finance the loan by paying an administrative fee.
Those who have been granted such loans can lodge a formal complaint with the Registry of Moneylenders.
Under the Moneylenders Act and Rules, licensed moneylenders have to inform borrowers of the terms and conditions of the loan, including how interest and fees are calculated and when these will be levied.
To ensure borrowers don't accept such loans, all licensed moneylenders will have to provide borrowers with a cautionary statement in writing before any loan can be given.
The Ministry of Law said in a release on Tuesday: "The directions stress to licensed moneylenders that they must cease offering loans to borrowers who are unlikely to be able to keep up with the repayment plans and as a result, incur multiple administrative or late payment fees. This is to prevent the snowballing of debts, which borrowers might have difficulty repaying."
It added that any breach of the directions will be investigated and dealt with accordingly.