Foreign Domestic Workers Borrowing from Legal and Illegal Moneylenders

Mr Gan Thiam Poh asked the Minister for Law (a) in the past 10 years, how many reports have been lodged by residents that their foreign domestic workers have borrowed from legal and illegal moneylenders respectively; (b) how many of such residents became the victims of harassment from loan sharks or legal money collectors respectively; and (c) whether there are plans to ban borrowings by foreign domestic workers from legal moneylenders.

The Registry of Moneylenders received no public feedback on foreign domestic workers (FDWs) borrowing from licensed moneylenders prior to 2017. The Registry received one case of feedback in 2017 and 38 cases of feedback in the first half of 2018. This reflects an increase in the number of FDWs who borrowed from licensed moneylenders from 1,500 in 2016, to 12,000 in 2017, and to 28,000 in the first half of 2018.

The Police have observed more foreigners residing in Singapore, including FDWs, borrowing from unlicensed moneylenders. The Police have also seen an increase in reports of harassment from unlicensed moneylenders arising from FDWs who took loans or acted as guarantors. From 2008 to 2012, the Police registered no such reports, while 2013 to September 2018 saw about 460 of such reports.

Any employer who is harassed by unlicensed moneylenders should report such activities to the Police. The Police adopt a tough enforcement stance against unlicensed moneylenders and anyone who assists them in perpetuating illicit activities. The Police and the 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.

Enhancing borrower protections. 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) 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.

The Registrar of Moneylenders have 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 a month.

In view of the recent increase in foreigners borrowing from moneylenders, on 4 October 2018, the Ministry of Law (MinLaw) announced two measures to strengthen protections for FDWs and other foreigners residing in Singapore from the effects of over-borrowing.

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: (a) individuals earning less than $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 monthly income. Both caps will be extended to all foreigners residing in Singapore. In addition, there will be a lower cap of $1,500 for all foreigners residing in Singapore who earn less than $10,000 annually.

Second, the Ministry will 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. This framework will help individuals to control their borrowing habits and to participate in debt assistance schemes administered by voluntary welfare organisations (VWOs) which typically require self-exclusion.

Third, on unlicensed moneylenders, the Ministry of Manpower (MOM) has announced that it will take administrative actions against work pass holders who borrow from unlicensed moneylenders. When a work pass holder is found to have borrowed from unlicensed moneylenders, MOM will inform the employer and revoke the work pass. The worker will then be repatriated and debarred from further employment in Singapore.

MOM will implement this measure against borrowing from unlicensed moneylenders in 2019, after a period of education and communication. MOM will continue to step up educational efforts on money management and the risks of borrowing from moneylenders, for work pass holders and their employers.

These measures will be complemented by existing support channels for work pass holders, such as VWOs, the Migrant Workers' Centre and the Centre for Domestic Employees.

MinLaw, together with MOM and the Singapore Police Force, will continue to monitor the situation closely following the implementation of these measures, and will assess if more stringent measures are necessary.