On the Debt Collection Bill – Speech by Louis Chua

Mr Speaker, my speech today will focus primarily on the increasing visibility of debt collection activities in the eye of the broader public, and how this prevalence is now intensifying as such activities are captured and spread on social media by either third parties or the purported debt collectors themselves.

Credit is essential for the functioning of modern economies, and the availability of credit can support growth, improve convenience and facilitate transactions on both the business and personal front. The danger of that is of course the resultant implications when debt owed is not repaid when it comes due, whether through one’s unwillingness or inability to pay.

In the earlier days of our nation’s history, unlicensed moneylending activities and its intimidating and violent means of debt collection are perhaps much more prevalent. While I confess that I have not witnessed such activities first hand, I am sure we have all come across stories of physical violence and intimidation by unlicensed debt collectors known colloquially as “Ah Longs”; or seen first-hand the words “owe money pay money” and the alleged debtor’s name and contact details painted on the walls of our housing estates, to name and shame these individuals.

I believe it is not in the interests of Singapore’s debt collection agencies to be identified in the same vein, given how they could play a significant and professional role in the recovery of non-performing loans. Yet, as the MHA pointed out, there has been a high number of Police reports against debt collection companies and debt collectors for conducting debt collection activities in a manner that caused alarm and nuisance to members of the public.

I am thus supportive of the introduction of this bill to institute regulations to better manage the dis-amenities arising from such activities, and I believe there is a need to elevate our nation’s stance towards debt collection and rehabilitation and hold these companies accountable for the conduct of their debt collectors.

With this as a guiding principle, I have three clarifications in relation to the enforcement of this proposed regulation.

Firstly, the Debt Collection Bill has defined the scope of debt collection to mean any activity undertaken in Singapore which ranges from the finding of the debtor, to requesting, demanding, or collecting of monies due. Section 45 highlights that the Minister may make regulations for restricting the manner or methods by which a licensee or any of its debt collectors, collect, or attempt to collect, any debt.

However, I wonder if the Minister can share any guidelines that will result in a debt collection infringing on the intended principle of preventing alarm and nuisance to the public? And if there are clearer regulations prescribing the methods which are deemed unacceptable for debt collection agencies?

For example, we would have seen videos showing men in uniform creating a ruckus outside a debtors’ home or office. In a September 2021 article by Today Online, a particular debt collection agency even publicly shared that they livestream themselves demanding debt repayment and upload such videos showing the debtors’ faces as so-called evidence to protect themselves.

Where such encounters can be an emotional one, it is all the more important we clearly demarcate the OB markers to better help guide their actions towards a less socially disruptive manner, which then fulfils the objective of the Bill. We should not let demeaning, disruptive and intimidating debt collection tactics take root in our society, and our laws need to make clear that such tactics and behaviours are not acceptable.

Second, I note in section eight of the Bill, in determining whether to grant a licence, the Licensing Officer may have regard to, and give any weight that the Licensing Officer considers appropriate to, any criteria and requirements that are prescribed, but may take into account any other matter or evidence that may be relevant. 

Similarly, in section 20 of the Bill there is also significant discretion in determining whether an individual is a ‘fit and proper’ person to be deployed as a debt collector. Will the Minister make clear what are some of the current criteria, requirements and weightage that are under consideration when this bill is operationalised? It is important that we provide regulatory clarity on this matter and ensure that individuals are not unfairly discriminated against, or perceive to be unfairly discriminated against, when seeking out employment in the debt collection industry, no different from any other regulated industry.

Finally, while I understand that there are public education efforts on indebtedness and borrowing, such as those by MoneySENSE, I wonder if we can intensify efforts to ensure individuals avoid the pitfalls of excessive debt, and the dangers of compound interest and excessive hidden fees and charges associated with not servicing one’s debt. Even for the well-educated and well-informed, this may not be straightforward. To cite a recent similar but unrelated example, a particular new bank lauds itself for transparency and simplicity, and proudly proclaims that there are no cash advance fees for its card. However, there will be an effective interest rate of 26.9% p.a. charged from the date of the transaction until the date of full payment. If left unchecked, these charges could continue to snowball inadvertently. 

While the intent of the Bill is to regulate this industry, I cannot help but wonder if this is equally an opportunity for us to explore how the debt collection effort can further evolve to become one that operates on a more holistic philosophy, as opposed to a zero-sum game where debt collectors win by forcing debtors to cough up monies to pay down their debt. This could be through empowering or even requiring debt collection agencies to provide their debtors with referrals to means of assistance focused on facilitating debt repayment arrangements.

For example, Credit Counselling Singapore (CCS) has been a recognised organisation which works with The Association of Banks in helping debt-distressed individuals manage their debt obligations. However, I understand that credit counselling and the creation of a debt management programme are voluntary and not mandatory programmes. In this case, education on how to manage debt and restructuring one’s debt where possible, can go a long way in preventing occurrences where debtors pay a seemingly infinite number of minimum payments that only service the interest charges.

Notwithstanding my clarifications, I support the bill.