How To Lodge A Complaint Against A Moneylender
September 1, 2022
When a money lender has ripped you off, it may feel like there’s nothing you can do about it.
But if the loan was taken from a licensed money lender, the odds are good that you do have options.
All complainants are encouraged to make the complaint in writing to enable follow-up action to be taken.
This article discusses how to make a complaint about a money lender.
When To Lodge A Complaint Against A Licensed Money Lender
Before you make a complaint about a licensed money lender, there are some things that you need to know.
A licensed money lender is one that is licensed by the Registry of Moneylenders.
You can make a complaint about a licensed money lender if it has violated the laws governing licensed money lenders in terms of unfair fees charged, or if it engages in coercive or harassment against you and your family.
Here are some unfair practices that even licensed money lenders (much less illegal ones) may employ that may warrant you to make a complaint about a money lender.
What Are The Unfair Practices Of Money Lenders?
Money lenders are entitled to charge interest on the loans they offer. However, there are some unfair practices that you should be aware of and which you are entitled to make a complaint about a money lender.
Some of them are when the money lender:
1. Refuses To Provide You With Information: This includes details such as its name, address, telephone number or email address, or if it refuses to give you copies of any documents related to your loan agreement (such as credit agreements). In such instances, it may well be a loan shark or unlicensed lender.
2. Does Not Allow You Time To Read Over All The Loan Documents: In addition, it may also ask you not to bring anyone else along when signing these documents so that it will not have to explain anything unclear before signing the contract is signed (e.g. interest rates).
3. Imposes A Late Payment Penalty That Is Not Mentioned In The Contract: If you don’t pay your loan back on time, money lenders will often charge you extra money as a penalty.
You should be informed of this fee beforehand. So check your contract or agreement to see what amount of interest or fee the lender will charge if you are late in paying.
4. Charges Unreasonably High Interest Rates: Singapore’s licensed money lenders often charge high interest rates on their loans as compared to banks. By law, this should be no higher than 48% per annum.
If your loan has an Annual Percentage Rate (APR) of more than 60%, it is probably too expensive for you to take out. If the lender doesn’t tell you what APR it can offer, then find another lender who will tell you this information before signing any contract.
5. Has No Repayment Plan: To avoid mistakenly taking out a loan from an unlicensed lender or a loan shark in Singapore, check whether the lender offer flexible repayment plans for the loans that it offers.
Make sure that these plans do not cause financial hardship for you or your family in case something goes wrong with the business, or your finances change due to unforeseen circumstances such as illness or redundancy.
6. Secretly Includes Hidden Charges: Some money lenders include hidden charges in their contracts without informing borrowers about them ahead of time.
This means that borrowers may end up paying more than what they expected than when they took out the loan from a money lender.
7. Does Not Provide Proper Legal Agreements: There are many cases where people take out loans from Singapore money lenders without signing any legal agreements with them first.
In these cases, borrowers don’t realise that they have entered into contracts with illegal lenders or loan sharks until it is too late.
8. Sets Unreasonable Conditions: Some money lenders insist on perfection regarding their terms and conditions.
For example, if you are unable to pay the full amount at once, some might insist that you pay in full before they even consider giving you a loan.
The same goes with repayment schedules and other requirements such as providing copies of documents, and so on. These requirements can be difficult for many people to fulfill, especially if they have bad credit or no income.
9. Does Not Take Your Circumstances Into Consideration: Some money lenders in Singapore fail to consider the circumstances under which their clients find themselves at any given time and hence end up taking advantage of them by charging exorbitant fees.
Note that a money lender may be licensed yet still break the laws set by the Registry of Moneylenders knowingly.
What Is Unlicensed Moneylending?
Unlicensed money lenders in Singapore are illegal lenders that should not operate as credit businesses.
They are often large-scale operators that try to entice the public into taking loans, for example, by advertising their services on social media, which licensed money lenders cannot do.
Unlicensed money lending can take many forms.
It can involve illegal activities such as loan sharking, which involves lending money at very high interest rates and resorting to violence to enforce repayment.
It also includes stalking or harassment behaviour when recovering loans from borrowers.
How To Lodge A Complaint Against A Money Lender
If you need to make a complaint about a money lender in Singapore, you can do so with the Consumer Protection Division under the Fair Trading Act.
Or you can make your complaint to the Registry of Moneylenders at [email protected] or by phone at 1800-2255-529.
Here are some ways to go about this.
Identify The Problem
The first step in lodging a complaint against your money lender is identifying the problem. One of the main reasons why many get into debt with money lenders is because they do not understand the terms and conditions of the loan agreement.
Therefore, you must read through your loan agreement carefully before signing it. If any part of your loan agreement does not make sense to you, contact your money lender immediately so that it can clarify it for you.
Talk To The Lender
If you have a problem with a lender, try talking to them about it in person. The most effective way to talk about your complaint is to be clear and firm about your concerns. Keep calm and avoid being abusive.
It’s best to have evidence of your loan agreement and any other documents related to the transaction. This can help you explain your situation more clearly and give the lender an understanding of why it should listen to you.
Record all Communications With The Lender
You must keep records of all communications with the lender, including emails, text messages and phone calls.
You should also record any conversations with the lender on your phone or another device so that you can refer back to them if there is an issue later on.
Write Down Everything That Happened When You Were Dealing With The Lender
If you had any problems dealing with the lender, write down everything that happened from start to finish so that you have an accurate record of events and can refer back to it later.
This will also help if someone else needs to refer to it at a later date.
It may shed some more light on the situation for you when the authorities know what happened based on their experience with this person or company before they dealt with them directly.
Seek Legal Advice
If talking with the lender doesn’t help, get in touch with a lawyer or legal aid to help you resolve the dispute through negotiation or mediation.
How Not To Fall For Loan Scams
You may be wondering, “What are the best ways to avoid loan scams and falling prey to scammers or an illegal money lender in Singapore?”
Here are some tips:
Ask Around And Get Recommendations
If you have friends or family members who have taken out loans before, ask them about their experiences. Did they get scammed by shady money lenders? If so, how did they avoid getting caught in the trap?
Look For A Registered Company
Check if your potential loan provider has a moneylending license in Singapore. This means that it is legally allowed to operate as a money lender in Singapore.
The lender should also not be charging exorbitant interest rates or offering other illegal services such as providing illegal loans for gambling purposes.
Don’t Pay In Full Before Receiving Your Loan
If the lender asks you to make a payment in advance, it’s likely a scam. Legitimate lenders don’t ask borrowers to pay before they receive their money.
Avoid Unrealistic Offers
A lender that offers an interest rate lower than the average rate is likely trying to lure borrowers with low fees but by charging high interest rates. The borrower ends up taking out more loans than he or she can afford.
Never Sign Anything Without Reading It Carefully First
Before signing any documents, read them carefully and ensure the lender is clear about what you’re being charged for so you don’t end up paying more than expected.
Ensure There Are No Hidden Fees or Charges Attached To Your Loan
Many lenders charge additional fees for everything – from setting up an account to getting another loan when you’re short on cash again — so look for lenders that make all their fees clear at the outset.