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Oral Answer to Parliamentary Question on FDWs borrowing from moneylenders

NOTICE PAPER NO. 1402, 1416 OF 2018 FOR THE SITTING ON 19 NOVEMBER 2018
QUESTION NO. 2346, 2347, 2386 FOR ORAL ANSWER

MPs: Mr Darryl David, Mr Sitoh Yih Pin

QUESTION NO. 2346. Mr Darryl David: To ask the Minister for Manpower (a) over the past three years, how many cases are there of domestic helpers who have defaulted on loans from licensed moneylenders; (b) whether the Ministry intends to implement any restrictions on domestic helpers taking such loans; (c) what are the consequences for such repeat defaulters; and (d) what are the consequences for their employers.

QUESTION NO.2347. Mr Darryl David: To ask the Minister for Manpower (a) over the past three years, how many domestic helpers have taken loans from unlicensed moneylenders; (b) what are the consequences for such domestic helpers; and (c) what recourse do the employers of these domestic helpers have should they be harassed by the unlicensed moneylenders.

QUESTION NO. 2386. Mr Sitoh Yih Pin: To ask the Minister for Law (a) what is the number of foreign domestic workers who have procured loans from licensed moneylenders in 2017 and 2018; (b) what are the liabilities for employers of foreign domestic workers who default on repayment of such loans; and (c) whether the Ministry has any plans to place any restrictions on foreign domestic workers procuring such loans.

The Ministry of Law and Ministry of Manpower provided a joint reply.

Answer by Ms Low Yen Ling, Senior Parliamentary Secretary for Manpower

  1. Mr Darryl David and Mr Sitoh Yih Pin asked about the consequences for foreign domestic workers (FDWs) and employers, and the recourse for employers when FDWs borrow from licensed and unlicensed moneylenders.  I will address these questions together.
  2. Where licensed moneylending is concerned, FDWs who do not repay their loans may be subject to civil action by licensed moneylenders, as with any other borrowers. Employers of FDWs are not liable to repay any of their FDWs’ loans. It is an offence for licensed moneylenders to harass the FDWs or their employers for repayment, or employ an agent to do so. FDW employers who are harassed should report to the Police.
  3. We do not condone any borrowing from unlicensed moneylenders by foreign workers. To send a clear signal of our strong stand, the Ministry of Manpower had earlier announced that if a work pass holder is found to have borrowed from unlicensed moneylenders, the employer will be informed and the employee’s work pass revoked. The foreign worker will then be repatriated and debarred from further employment in Singapore.
  4. The rule against borrowing from unlicensed moneylenders will be implemented in 2019, following a period of education and communication with work pass holders and their employers. We will intensify efforts to help them learn about money management and the risks of borrowing from moneylenders.
  5. Any person who is harassed by unlicensed moneylenders should report such activities to the Police.  From 2008 to September 2018, the Police registered about 460 reports of harassment by unlicensed moneylenders arising from FDWs borrowing or acting as guarantors. The Police and Attorney-General’s Chambers have prosecuted errant debt collectors who have violated the law, and will continue to take strong enforcement action against such conduct.

Answer by Mr Edwin Tong, Senior Minister of State for Law

  1. Mr Darryl David and Mr Sitoh Yih Pin asked for statistics on foreign domestic workers (FDWs) who have taken loans from licensed and unlicensed moneylenders. Mr David and Mr Sitoh also asked if the Ministry of Law intends to place any restrictions on the FDWs taking such loans.
  2. Let me deal with both these questions together.

    Recent Borrowing Trends
  3. The number of FDWs who took loans from licensed moneylenders was approximately 1,500 in 2016, 12,000 in 2017, and 28,000 in the first half of 2018.
  4. Moneylending regulations do not formally define a “loan default”. However, estimates based on Moneylenders Credit Bureau (MLCB) data from 2016 to the first half of 2018 show that the majority of FDWs have repaid their loans from licensed moneylenders.
  5. The Police has also observed more foreigners residing in Singapore, including FDWs, borrowing from unlicensed moneylenders.

    Enhancing Borrower Protections
  6. There are currently several measures to protect all individuals who borrow from licensed moneylenders. For example, the Moneylenders Rules permit a licensed moneylender to charge only the following for each loan:
    a. First, an upfront administrative fee of up to 10%;
    b. Interest of up to 4% per month;
    c. Late interest of up to 4% per month; and
    d. Late fees of up to $60 per month.
  7. The Registrar of Moneylenders had issued Directions to regulate moneylenders’ activities. In particular, moneylenders are prohibited from advertising their loans to members of the public via mobile text messages or emails. Moneylenders are also prohibited from conducting abusive practices such as repeatedly “rolling over” existing loans to charge the administrative fee multiple times even though no new credit is issued; or offering split loans so that late fees can be charged multiple times per loan, each month.
  8. In view of the recent increase in foreigners borrowing from moneylenders, on 4 October 2018, the Ministry of Law announced two measures to strengthen protections for FDWs and other foreigners residing in Singapore from the effects of over-borrowing.
  9. First, the Ministry will impose aggregate loan caps to limit the total amount that any foreigner residing in Singapore can borrow from licensed moneylenders. The caps were first announced for Singapore Citizens and Permanent Residents under the Moneylenders (Amendment) Bill in January this year, and the caps are:
    a. Individuals earning up to $20,000 a year may borrow up to $3,000; and
    b. Individuals earning $20,000 or more a year may borrow up to six times of their monthly income.
  10. Both caps will be extended to all foreigners residing in Singapore. In addition, there will also be a lower cap of $1,500 for all foreigners residing in Singapore who earn less than $10,000 annually.
  11. Second, the Ministry will also introduce a self-exclusion framework for all individuals who borrow from licensed moneylenders. Both Singapore residents and foreigners may apply for self-exclusion. Licensed moneylenders will be prohibited from lending to self-excluded individuals.
  12. This framework will help individuals to control their borrowing habits, and to participate in debt assistance schemes administered by voluntary welfare organisations which typically also require self-exclusion.
  13. The Ministry of Law, together with the Ministry of Manpower and the Singapore Police Force, will continue to monitor the situation following the implementation of these measures, and will assess if more stringent measures are necessary.