Under the new Debt Collection Bill that was passed in Parliament on Tuesday, it seeks to regulate the debt collection industry and prevent problematic debt collection by putting in place appropriate levers to take errant debt collection businesses and debt collectors to task.
Minister of State for Home Affairs Sun Xueling said that the number of police reports made against the conduct of debt collection businesses and debt collectors has remained high in recent years.
“From 2018 to 2021, an average of 367 reports were lodged each year. The reports were mainly against debt collection tactics aimed at pressuring debtors into payment by causing public embarrassment and inconvenience to them,” said Sun.
The Minister cited two examples that took place in which the debt collectors were subsequently taken to task under existing legislation, such as the Protection from Harassment Act and Penal Code.
The first was in 2019 when the debt collector wore a traditional funeral outfit and harassed the debtor’s workplace. The second example brought up was the incident at a food stall in Funan Mall in 2015. The debt collectors unfurled a large banner stating that debt recovery was in process and proceeded to disrupt the stall’s business, including harassing the staff and damaging the stall’s equipment.
“Debt collection is a legitimate economic activity that facilitates the fulfilment of financial obligations. However, individuals and businesses should not be subjected to debt collection methods that clearly exceed what may be considered reasonable pressure for payment, especially if these methods also affect the public’s sense of safety and security,” explained the Minister.
Under the new law, all debt collection businesses, including their key appointment holders, and debt collectors, will be screened by the police and must be assessed to be fit and proper before they are granted a licence or approval.
However, ‘already-regulated businesses’ such as moneylenders and banks will fall under a class of licensing that is not subjected to the ‘fit and proper’ checks by the police as they are assessed to pose lower law and order risk compared to debt collection businesses that are not currently regulated.
“This Bill seeks to introduce a regulatory framework, to improve the conduct of the debt collection industry and better address disamenities that may arise from problematic debt collection conduct,” explained Sun.
Debt collectors that display or engage in conduct that threatens the physical safety of the debtor or any other third parties like the debtor’s family members, including sending text or social media messages and pasting a notice with the debtor’s identity information on the door of the debtor’s neighbours may be jailed up to 12 months and fined not exceeding $10,000.