SINGAPORE — Proposed laws to regulate debt collection activities in Singapore could help raise standards across the industry, but some companies worry that there are unintended effects such as debtors using these laws to dodge payments. 

The Ministry of Home Affairs (MHA) announced in a statement on Wednesday (June 15) that it is looking to enact laws to regulate debt collection activities. 

Some proposals included the introduction of licensing and approval regime for debt collection companies and their employees.

This would include a screening process by the police, which will be given the powers to grant or refuse license applications, modify licensing and approval conditions, and suspend or revoke licences or approvals. 

Among other things, a debt collector must also verify that the subject of their activities is the debtor and not "display or use any physically threatening words, behaviour, writing, sign or visible representation".

These plans came after a high volume of police reports have been made against debt collectors in the past few years, hitting a peak of 590 such reports in 2018.

WHAT DEBT COLLECTION FIRMS SAY

Mr Israel Shankar Ganesh, deputy chief executive officer and head of legal at debt collection firm JMS Rogers Global, told TODAY that the company supports the proposed legislations and believes that it will promote industry standards. 

Speaking in a phone interview, he said: "We are welcoming the regulations by MHA and we hope that it will be implemented as soon as possible. This is so that the industry can be regulated and there will be repercussions for errant debt collection companies." 

Ms Yvonne Ho, managing director of Singapore Debt Collection Service, said that the proposed laws would regulate debt collection companies that mishandle money entrusted to them, but over-regulating these companies would pose challenges for collectors. 

"We should not ignore the fact that too many restrictions will increase the difficulty of debt recovery jobs. The truth is, there are many people out there defaulting on payments and looking for loopholes to escape what they owe," she added. 

Similarly, Mr Winston Chin, founder of debt collection firm KX Unit, said: "Debtors are going to search for whatever ways they can to get rid of collectors. They may resort to calling the police and reading between the lines (of the law) and finding ways to manipulate the law to their advantage." 

Another concern raised was related to the proposal to introduce a screening process — with similar standards held by many other regulatory regimes. This may make hiring tougher for an industry already plagued by manpower shortage. 

Mr Chin said that most debt collectors leave the industry after three months, usually because of the stress of the job. 

"There are not many people joining this industry and hiring has always been a big problem. I have been here for seven years already and I'm still facing the same problem."

Echoing his sentiments, one company, Resolute Debt Recovery, told TODAY that the screening process by the police will cause the pool of potential candidates to shrink even more, if it were too rigid. 

However, some others believe that the proposed licensing laws have to be spelt out clearly for debt collectors to do their jobs smoothly. 

Resolute Debt Recovery said: "These laws will definitely affect our debt recovery rate. While we do not use intimidation or threats, the authorities need to explain what would be considered threatening... Sometimes, debtors would shout at us first. Then how should we respond?" 

In response to TODAY's queries on whether the proposed laws will affect how debt collection companies use social media to promote their business, MHA said: "Under the proposed Bill, only a licensed debt collection company may advertise that it is undertaking debt collection business.

“This applies to all advertising platforms, including advertising on social media." 

MHA added that it seeks to "balance the extent of regulatory requirements to impose on debt collection entities, against the risk that such entities might engage in problematic debt collection conduct".

It welcomes members of the public to share their views through the ongoing public consultation. 

TODAY has reached out to the Credit Collection Association of Singapore for comments.