MHA seeks public feedback on proposals to regulate debt collection activities in Singapore
SINGAPORE: The Ministry of Home Affairs (MHA) is seeking public feedback on proposals to regulate debt collection activities in Singapore.
“Over the past few years, there has been a high number of police reports made against debt collection companies and their staff for conducting debt collection in a manner that caused alarm and nuisance to members of the public,” said MHA in a consultation paper on Wednesday (Jun 15).
A total of 134 police reports were made in 2015, increasing over the years to a peak of 590 in 2018, according to data provided by the ministry.
The number of reports saw a downward trend in 2019 and 2020, before rising again to 272 last year.
MHA said that it recognises debt collection is a “legitimate activity that facilitates the fulfilment of financial obligations”.
“However, in view of the increasing concerns, there may be a need to institute upstream regulatory interventions on the industry, to better manage the disamenities from such activities,” it added.
The proposals seek to ensure that only companies and people who are assessed as suitable by the police can be involved in debt collection, as well as set boundaries for how such activities are conducted, said MHA.
“Our guiding principle is to calibrate the regulatory requirements based on the risk of the companies or individuals engaging in problematic debt collection conduct,” the ministry added.
MHA proposes for debt collection activity to be defined as any activity undertaken to collect or attempt to collect any debt.
The definition excludes the serving or attempting to serve any legal process or letter of demand on any person in connection with the enforcement of any debt.
The definition covers both physical and non-physical activities, such as visiting the debtor's workplace and making calls to the debtor, and is "scoped broadly to prevent errant debt collectors from finding ways to circumvent the regulations", said MHA.
The ministry is also seeking to introduce a licensing regime for debt collection companies and an approval system for their staff members collecting debts.
MHA additionally proposes for companies which are not primarily involved in debt collection but conduct such activities to recover debts for their businesses to be class licensed.
Under a class licensing framework, these companies and their employees do not need to apply for licensing or approval from the police, the ministry said.
Rules for debt collection activities by licensees and class-licensed companies and their staff can be introduced to set out acceptable conduct when collecting debt, according to another proposal by the ministry.
In March, Minister of State for Home Affairs Desmond Tan said in Parliament that MHA will put in place a new debt collection regulatory framework. This will include a new licence regime and introduce restrictions on what debt collectors can and cannot do.
He was responding to a question on how the Government will tackle public disorder brought about by errant debt collection activities.