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Parliament passes Bill to stamp out 'problematic' debt collection tactics as MPs flag concerns like fairness of screening process

SINGAPORE — Parliament on Tuesday (Sept 13) passed a Bill aimed at stamping out "problematic debt collection conduct", by requiring debt collection firms to get a licence to operate. Their workers will need to be screened and approved by the authorities.

Parliament passes Bill to stamp out 'problematic' debt collection tactics as MPs flag concerns like fairness of screening process
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  • Debt collection firms here will soon require a licence to operate and their workers will need to be screened and approved by the authorities
  • This came after a Bill aimed at stamping out "problematic debt collection conduct" was passed in Parliament on Sept 13
  • Debt collection businesses will be assessed based on their past offences involving harassment or violence, before being granted a licence  

SINGAPORE — Parliament on Tuesday (Sept 13) passed a Bill aimed at stamping out "problematic debt collection conduct", by requiring debt collection firms to get a licence to operate. Their workers will need to be screened and approved by the authorities.

Concerns over whether the screening process will be discriminatory, and questions on what would constitute problematic debt collection conduct were debated before the law introducing the regulatory framework was passed. 

The Debt Collection Bill was introduced by the Ministry of Home Affairs (MHA) last month, and came after a high number of police reports were made against errant debt collection companies and collectors over the past few years. 

Tabling the Bill, Ms Sun Xueling, Minister of State for Home Affairs, said that an average of 367 reports against the conduct of debt collection businesses and debt collectors was filed each year from 2018 to 2021.

"The reports were mainly against debt collection tactics aimed at pressuring debtors into payment by causing public embarrassment and inconvenience to them," she said. "Such tactics have attracted significant public attention and affected the public’s sense of safety and security." 

The reports were mainly against debt collection tactics aimed at pressuring debtors into payment by causing public embarrassment and inconvenience... (This) has attracted significant public attention and affected the public’s sense of safety and security.
Ms Sun Xueling, Minister of State for Home Affairs

She added that debt collection is a "legitimate economic activity that facilitates the fulfilment of financial obligations", but that individuals and businesses should not be subjected to debt collection methods that "clearly exceed what may be considered reasonable pressure for payment".

This is especially if these methods also affect the public’s sense of safety and security, she added. 

The Bill seeks to regulate the debt collection industry and prevent problematic debt collection conduct by setting "standards of entry" into the industry and imposing licensing requirements on debt collection businesses and debt collectors.

For instance, under the licensing regime, a business must apply for and obtain a licence to carry out debt collection activities.

An individual who is deployed as a debt collector must make a joint application with their debt collection business, and must obtain an approval before he or she can carry out any debt collection activity.

The Bill also seeks to reduce problematic debt collection conduct by putting in place "appropriate levers" to take errant debt collection businesses and debt collectors to task.

For instance, the new laws will require debt collectors to verify that the person from whom they are trying to collect debt is indeed the debtor, and will prohibit debt collection conduct that threatens the physical safety of the debtor or any other third parties such as the debtor’s family members. 

Debt collection businesses that operate without a licence could receive a fine of up to S$20,000 or imprisonment for a term not exceeding two years, or both.

For individuals who act as debt collectors for debt collection businesses without approval, they could receive a fine not exceeding S$10,000 or up to 12 months' jail, or both. 

At least six Members of Parliament (MPs) asked what criteria would be used to determine whether a debt collection business is "fit and proper" to be granted a licence. 

Ms Sun said that factors deemed relevant in assessing the applicant's propensity to engage in problematic debt collection conduct include past offences involving harassment or violence, as well as the severity of any such offences and the length of time that has passed since they were committed. 

Sengkang Group Representation Constituency (GRC) MP Louis Chua asked what the requirements were to determine if individual debt collectors were fit for the role. He added that "regulatory clarity" would be important so as to ensure such individuals are not unfairly discriminated against.

Ms Sun said that the considerations used to assess whether an individual is fit and proper to work as a debt collector are similar to those used for security officers.

"The approval to be deployed as a debt collector is not time-limited, however, the approval may be revoked or suspended should the licensing officer assess that the debt collector no longer meets the fit and proper criteria," she said. 

The approval to be deployed as a debt collector is not time-limited, however, the approval may be revoked or suspended should the licensing officer assess that the debt collector no longer meets the fit and proper criteria.
Ms Sun Xueling, Minister of State for Home Affairs

Mr Chua also asked whether there would be clear regulations defining what constitutes "unacceptable debt collection methods", while Nee Soon GRC MP Derrick Goh, Yio Chu Kang MP Yip Hon Weng, and Hougang MP Dennis Tan asked if problematic debt collection conduct on online platforms will be prohibited under the Bill. 

Ms Sun reiterated that the new regulations will prohibit any behaviour that threatens the physical safety of the debtor or any other third parties such as the debtors' family members, and this includes sending text or social media messages to the debtor threatening physical harm to the debtor or his or her family.

She added that debt collection conduct on online platforms, such as the live streaming of debt collection activities in and of itself is not an offence "unless it crosses the threshold for other criminal offences, such as the Protection from Harassment Act". 

Related topics

debt collection debt collectors loan sharks moneylender money lending debt MHA Parliament

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