Moneylenders in Singapore are now able to access and share borrower information with more parties, thanks to recent amendments to the law. Under the changes, licensed moneylenders can now disclose borrower details to obtain relevant information from third parties, including credit bureaus listed by law.
These credit bureaus can then provide comprehensive information about an applicant’s creditworthiness and indebtedness, aiding moneylenders in making informed decisions about granting loans. Previously, licensed moneylenders were limited in sharing data. This created challenges for conducting thorough credit checks, potentially leading to over-borrowing when borrowers withheld or inaccurately declared their credit information.
The new legislation ensures that the extent of shared borrower information is restricted to what is necessary. In addition to credit bureaus, licensed moneylenders can also share borrower information with third parties engaged in IT support or debt recovery. Furthermore, they can share information with prescribed persons for purposes related to the welfare and protection of applicants, borrowers, and sureties.
To enhance accuracy, moneylenders will also be allowed to obtain records from public agencies to verify information submitted by loan applicants. The Ministry of Law plans to collaborate with social service agencies that have been assisting borrowers with debt consolidation and restructuring plans. By fostering effective negotiation, these changes aim to benefit both borrowers and moneylenders.
What It Means to Borrowers: Summary
If you’re considering obtaining a loan from a licensed moneylender, the recent changes to the law may affect you. Here’s what it means for borrowers:
More Comprehensive Credit Checks
Licensed moneylenders can now obtain credit reports from a list of prescribed credit bureaus, allowing for more comprehensive credit checks on borrowers. This means that moneylenders will have access to a wider range of information regarding an applicant’s creditworthiness and indebtedness, which can influence their decision to grant a loan.
Disclosure of Borrower Information
Licensed moneylenders are now permitted to disclose borrower information to third parties, such as prescribed credit bureaus, for the purpose of obtaining a credit report. They can also share borrower information with third parties engaged to provide IT support or recover debts. Additionally, they can share information with any prescribed person for purposes related to the welfare and protection of applicants, borrowers, and sureties.
Limitations on Disclosed Information
The extent of the borrower information that can be shared is limited to what is necessary. For example, when purchasing a credit report from a prescribed credit bureau, the disclosure of the identification number of the loan applicant will be necessary. This means that moneylenders will not be able to share excessive information about borrowers without proper justification.
Verification of Information
Licensed moneylenders can now obtain records from public agencies to verify the accuracy of information submitted by loan applicants. This helps to prevent fraudulent information from being used to obtain loans.
Over-borrowing Prevention
The previous restrictions on credit checks may have enabled over-borrowing by individuals who withheld or inaccurately declared their credit information. With the expanded access to credit reports, licensed moneylenders can make more informed decisions on whether to grant a loan, which may prevent over-borrowing.
In summary, these changes to the law may result in more transparent and informed lending practices by licensed moneylenders, which can benefit borrowers in the long run. However, borrowers should also be aware that their information may be disclosed to third parties for credit checks and other purposes.